111 FERC ¶ 61,413

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Pat Wood, III, Chairman; 

 Nora Mead Brownell, Joseph T. Kelliher,

 and Suedeen G. Kelly.

Reporting Requirement for Changes in Status Docket No. RM04-14-001

For Public Utilities With Market-Based Rate

Authority

ORDER ON REHEARING

(Issued June 16, 2005)

1. In this order, the Commission grants in part and denies in part the requests for 

rehearing and clarification of Order No. 652.1 In particular, we provide additional 

guidance on the types of contracts and events that could be reportable under Order No. 

652. We also clarify that, in determining whether a given increase in generation is in 

excess of the materiality threshold of 100 MW, market-based rate sellers may net 

decreases against increases and specify the generic language that market-based rate 

sellers are to incorporate into their market-based rate tariffs. 

Background

2. Since the Commission began allowing public utilities to make sales at marketbased rates, it has required such market-based rate sellers to report any changes in status 

that would reflect a departure from the characteristics the Commission relied upon in 

granting market-based rate authority. When the Commission first granted market-based 

rate authorizations, it required traditional utilities that satisfied the Commission’s initial 

market power review to file an updated market power analysis every three years to allow 

the Commission to monitor competitive conditions and to determine whether the 

applicants still satisfied our market power concerns.2 Power marketers, on the other 

 

1

Reporting Requirement for Changes in Status for Public Utilities with MarketBased Rate Authority, Order No. 652, 70 Fed. Reg. 8,253 (Feb. 18, 2005), FERC Stats. 

& Regs. ¶ 31,175 (2005).

2

See, e.g., Entergy Services, Inc., 58 FERC ¶ 61,234 (1992); Louisville Gas 

& Electric, 62 FERC ¶ 61,016 (1993).
Docket No. RM04-14-001 - 2 -

hand, were required to promptly notify the Commission of changes in status.3 

Subsequently, the Commission has allowed market-based-rate sellers to choose between 

promptly reporting changes in status, filing a three-year update in lieu of reporting 

changes in status as they occurred, 4 or reporting such changes in conjunction with the 

updated market analysis.5 

3. On October 6, 2004, the Commission issued a Notice of Proposed Rulemaking 

(NOPR) that proposed to standardize and clarify market-based rate sellers’ reporting 

requirement for changes in status.

6

The Commission proposed to impose uniform 

standards on all market-based rate sellers by eliminating the option to delay reporting

changes in status until submission of the triennial review, or to file a triennial review in 

lieu of reporting changes in status as they occur. Acting pursuant to section 206 of the 

Federal Power Act (FPA),

7

the Commission proposed to amend its regulations and to 

modify the market-based rate authority of current market-based rate sellers to include the 

requirement to report to the Commission any change in status that would reflect a 

departure from the characteristics the Commission relied upon in granting market-based 

rate authority no later than 30 days after the change in status occurs. The Commission 

also proposed that this reporting requirement be incorporated into the market-based rate 

tariff of each entity that is currently authorized to make sales at market-based rates, as 

well as that of all future applicants. 

4. On February 10, 2005, the Commission issued Order No. 652, which, among other 

things: imposed uniform standards on all market-based rate sellers by eliminating the 

option to delay reporting changes in status until submission of the triennial review or to 

file a triennial review in lieu of reporting changes in status as they occur; specifically 

refers to “control” of generation or transmission facilities as a trigger which could result 

in the obligation to make a change in status filing; provides guidance as to the 

“characteristics” the Commission relies on in evaluating whether to grant market-based 

 

3

See, e.g., Citizens Power & Light Corp., 48 FERC ¶ 61,210 (1989); Enron Power 

Marketing, 65 FERC ¶ 61,305 (1993); InterCoast Power Marketing Co., 68 FERC 

¶ 61,248 (1994).

4

See, e.g., Morgan Stanley Capital Group, Inc., 69 FERC ¶ 61,175 (1994). 

5

See, e.g., AEP Power Marketing, Inc., 76 FERC ¶ 61,307 at 62,516 (1996); 

Montaup Electric Co., 85 FERC ¶ 61,313 at 62,232 (1998); Sithe/Independence Power 

Partners, 101 FERC ¶ 61,210 at 61,907 (2002). 

6

Reporting Requirement for Changes in Status For Public Utilities With MarketBased Rate Authority, 109 FERC ¶ 61,021 (2004) (NOPR).

7

 16 U.S.C. § 824e (2000).
Docket No. RM04-14-001 - 3 -

rate authority; provides guidance as to the form, content, and timing of a change in status 

filing; and incorporates into all market-based rate tariffs the standards discussed herein.

5. Requests for rehearing and/or clarification of Order No. 652 were submitted by the 

Constellation Energy Group (Constellation), the Edison Electric Institute and the Alliance 

of Energy Suppliers (EEI), the Electric Power Supply Association (EPSA), and Reliant 

Energy (Reliant).

General

Rehearing Requests

6. EEI requests rehearing of Order No. 652 on the ground that the rule is

impermissibly vague. EEI contends that the open-ended language that the Commission 

has adopted is so ambiguous as to raise serious concerns as to whether full compliance is 

possible without more specific guidelines or extraordinarily burdensome or unnecessary 

filings.8

Commission Determination

7. We reject EEI’s request for rehearing on the ground that Order No. 652 is 

impermissibly vague for the same reasons we rejected similar arguments in Order No. 

652.

9

 EEI has not provided any evidence to convince us otherwise on rehearing. As we 

have explained, Order No. 652 does not impose a new reporting requirement on marketbased rate sellers, but rather standardizes and clarifies their pre-existing obligation to 

report changes in status. In our experience of administering the changes in status 

reporting requirement, we have not found that market-based rate sellers consider the 

reporting obligations to be overly broad or vague, and Order No. 652 offers further 

guidance to market-based rate sellers on compliance with their obligation. Furthermore, 

preparation of the changes in status report – which will consist of a transmittal letter 

describing the change in status and explaining whether or not it reflects a departure from 

the characteristics that the Commission relied on in originally granting market-based rate 

authority – will normally impose a minimal burden on market-based rate sellers.

 

8

 EEI Rehearing Request at 3.

9

 Order No. 652, FERC Stats. & Regs. ¶ 31,175 at P 25.
Docket No. RM04-14-001 - 4 -

Triggering Events

Rehearing Requests

8. EEI requests that the Commission clarify the events that trigger the change in 

status reporting obligation by including an illustrative list of triggering events. EEI notes 

that, despite the requests from numerous commenters to include an illustrative list of 

specific events for clarity purposes, the Commission stated in Order No. 652 that it does 

not believe that commenters have provided sufficient support for their contention that the 

inclusion of an illustrative list would in fact increase regulatory certainty. EEI contends 

that this contrasts with the Commission’s decision to include an illustrative list of the 

types of contracts that trigger a reportable event. EEI thus urges the Commission to

adopt the defined categories of specific events proposed in EEI’s initial comments.10

There, EEI urged the Commission to establish a reasonable definition of what constitutes 

a material change and proposed that the following types of events be excluded from the 

change in status reporting requirement: (i) changes in status that have already been taken 

into account in a prior Commission market-based rate review; (ii) changes in status 

subject to a filing requirement under section 203 of the FPA; (iii) changes in status below 

EEI’s proposed materiality thresholds for generation and transmission facilities, 

production inputs, changes in affiliation status, and long-term contracts; and (iv) changes 

in status that are not within the applicant’s control.11

Commission Determination

9. We will grant in part and deny in part EEI’s requests that we adopt the specific 

exclusions from the change in status reporting requirement that EEI proposed in its 

comments on the NOPR. We clarify that market-based rate sellers need not report 

changes in status that the Commission has already taken into account in an initial 

application for market-based rate authority or in a subsequent triennial review. With 

regard to EEI’s remaining requests for exclusions from the change in statue reporting 

requirement, we note that in Order No. 652, we rejected the requests by EEI and others to 

exempt from the reporting requirement changes in status that are the subject of a section 

203 application, but we clarified that a market-based rate seller may incorporate by 

reference in its notice of change in status any filings regarding the change in status made 

pursuant to other reporting requirements.12 Similarly, in response to proposals from EEI 

and a number of other commenters concerning materiality thresholds, we adopted a 

cumulative threshold of 100 MW for generation increases, and we provide additional 

 

10 EEI Rehearing Request at 3-4.

11 EEI Comments on NOPR at 3-11.

12 Order No. 652, FERC Stats. & Regs. ¶ 31,175 at P 34.
Docket No. RM04-14-001 - 5 -

clarification as to the applicable materiality thresholds below.13 Finally, we adopted 

EEI’s proposal that the reporting obligation should extend only to changes in 

circumstances within the knowledge and control of the applicant.14 

10. In an effort to provide additional guidance and in response to EEI’s request for 

rehearing, we clarify that the following constitute reportable events pursuant to Order No. 

652: contracts such as those that result in a change of control of generation or 

transmission facilities; cumulative generation increases of 100 MW or more “up-rates” in 

generation; the testing of new generation facilities (subject to the 100 MW cumulative 

threshold); acquisitions of ownership or control of intrastate natural gas facilities or 

storage facilities. We believe that the inclusion of a non-exclusive illustrative list as 

described above provides adequate guidance to the industry while preserving the 

Commission’s ability to consider the ever-changing nature of the contractual 

arrangements. 

Exemptions

Rehearing Requests

11. EEI also requests that the Commission clarify that a number of specific events are 

exempted from the change in status reporting requirement. First, EEI seeks clarification 

that, like financial contracts, contracts for a fixed quantity of delivered energy (i.e., 

“energy-only” contracts) do not transfer control and do not constitute a reportable change 

in status.15 Second, EEI requests clarification that the signing of contracts for 

construction need not be reported, at least until the facilities become operational.

16 Third, 

EEI argues that an increase in transmission facilities that enhances total transfer 

capability (TTC) does not increase generation market power and should not be reportable 

as a change in status.17

 

13 Id. at P 68.

14 Id. at P 27.

15 EEI Rehearing Request at 5. Reliant also requests that the Commission clarify 

that it does not consider energy-only purchases to constitute control of capacity because 

such transactions do not transfer any control, in the form of dispatch or other unit-specific 

rights, over capacity or generation. Reliant Rehearing Request at 10.

16 EEI Rehearing Request at 6.

17 Id. at 6.
Docket No. RM04-14-001 - 6 -

Commission Determination

12. In response to EEI’s requests for clarification above, we clarify that, to the extent 

that a contract for a fixed quantity of delivered energy does not confer control, it need not 

be reported. We are unwilling, however, to grant a generic exemption because such 

contracts could conceivably give the buyer control, e.g., by allowing the buyer to 

determine when such power is to be dispatched or delivered or whether to withhold 

power from the market. With respect to construction contracts, we clarify that the change 

in status reporting requirement is not triggered until test power is generated (subject to 

the 100 MW cumulative threshold). Given the long lead times and financial and 

regulatory hurdles of constructing facilities, it is not certain at the time the construction 

contract is signed whether or when the facility will actually be placed into service. Order 

No. 652 states that change in status reports must be filed no later than 30 days after the 

legal or effective date of the change in status (i.e., the change in control or ownership), 

which would normally not occur at least until the facility in question becomes 

operational. However, we note that market-based rate sellers are free to file reports of 

prospective changes in status report when they enter into such construction contracts, 

provided that this filing contains the same information as a report filed after the change in 

status.

18

 Finally, we will grant EEI’s request for clarification that increases in 

transmission facilities that enhance TTC need not be reported to the extent that such 

increases are due solely to a public utility’s upgrades of its own network or construction 

of new facilities. However, we are unwilling to make a blanket statement that increases 

in transmission facilities can never constitute a reportable change in status where such 

increases are due to changes of ownership or control over third parties’ transmission 

facilities.

Control

Rehearing Requests

13. A number of entities have requested that the Commission clarify the definition of 

control in Order No. 652. Constellation requests that the Commission clarify that the 

concept of control refers to circumstances in which a market-based rate applicant obtains 

operational control and further that operational control should be defined as “the ability 

of the market-based rate seller by ownership, contract or otherwise to direct at its 

discretion the physical dispatch of a generating facility.”19 Constellation contends that 

this definition is appropriate because it reflects the fact that for an applicant to exercise

control it must have the ability to direct generation output and the authority to unilaterally 

determine such direction. According to Constellation, this definition of control would 

 

18 Order No. 652, FERC Stats. & Regs. ¶ 31,175 at P 106.

19 Constellation Rehearing Request at 3, 5.
Docket No. RM04-14-001 - 7 -

exclude contracts where an entity is acting as an agent in providing scheduling and 

dispatch services to a generator for another party or where it is brokering or marketing 

the output of a generator on behalf of another party.

20 Constellation also argues that this 

approach is consistent with the definition of control in the April 14 and July 8 Orders.

21

Finally, Constellation contends that the standard used in El Paso Electric Co.,

22 namely, 

“a quantum of control” should not be the deciding factor in a generation market power 

analysis because it requires applicants to make a subjective determination and could lead 

to multiple market-based rate applicants having control over the same generation 

resources.

23

 

14. EPSA requests that the Commission clarify that, in order for an entity to have 

control under a given arrangement, it must have the ability to take more than ministerial 

actions under the arrangement. Specifically, for an entity to have control, it must have 

full decision-making authority over the capacity reaching the relevant market under a 

particular arrangement.24

15. Finally, Reliant requests clarification of the Commission’s definition of control as 

applied to tolling agreements, capacity credits and master agreements. With respect to 

tolling agreements or long-term contracts that provide to the purchaser scheduling and 

dispatch rights to output from a designated generating facility, Reliant urges the 

Commission to clearly state that, whether or not a purchaser of capacity dispatches the 

capacity, as between the seller and the purchaser, the purchaser has control over the 

capacity/generation that is the subject of the agreement.25 Reliant also suggests that, to 

the extent that dispatch rights are not conferred on purchasers of capacity credits, the 

Commission should clarify that purchases of capacity credits/regulatory capacity do not 

confer control of generation.26 Finally, Reliant seeks clarification as to the proper 

 

20 Id. at 8.

21 AEP Power Marketing, Inc., 107 FERC ¶ 61,018 (April 14 Order), order on 

reh’g, 108 FERC ¶ 61,026 (2004) (July 8 Order).

22 108 FERC ¶ 61,071 (2004), reh’g pending (El Paso) (the Commission found 

that Enron “at times had a quantum of control and operated El Paso Electric’s assets 

during certain off-peak periods”).

23 Constellation Rehearing Request at 7.

24 EPSA Rehearing Request at 6.

25 Reliant Rehearing Request 9.

26 Id. at 10.
Docket No. RM04-14-001 - 8 -

treatment of master agreements with integration clauses to the effect that the master 

agreement and transactions entered into thereunder constitute a single integrated 

agreement. Reliant recommends that the Commission provide guidance that, 

notwithstanding integration clauses in master agreements, the one-year term requirement 

be evaluated on an individual transaction basis.27

Commission Determination

16. We believe that the Commission has given adequate specificity as to what 

constitutes control in Order No. 652 and the body of Commission precedent on this 

subject, and we will not further define or narrow the definition. While Constellation’s 

proposal may be appropriate in some circumstances, the issue of control is complex, factspecific, and dependent on the specific terms and conditions of the contract in question. 

As we stated in Order No. 652, “control” refers to arrangements, contractual or 

otherwise, granting control of generation or transmission facilities, just as effectively as 

they could through ownership. In short, if an applicant has control over certain capacity 

such that the applicant can affect the ability of that capacity to reach the relevant market, 

then that capacity should be attributed to the applicant when performing the generation 

market power screens. The capacity associated with contracts that confer operational 

control of a given facility to an entity other than the owner must be assigned to the entity 

exercising control over that facility, rather than to the entity that is the legal owner of the 

facility. On this basis, it is not possible to predict every contractual agreement that could 

result in a change of control of an asset. Moreover, as the Commission further stated in 

Order No. 652 that, to the extent parties wish to propose specific definitions or 

clarifications to the Commission’s historical definition of control, they may do so in the 

course of the market-based rate rulemaking in Docket No. RM04-7-000. 28

17. Moreover, we note that Constellation’s criticisms of our definition of control are 

misplaced. We reject Constellation’s contention that in El Paso and Order No. 652 we 

adopted a broader definition based on a lesser standard of control, i.e., “quantum of 

control”. Rather, we emphasized in both that control is present where an entity controls 

the decision-making authority over sales of electric energy, including discretion as to 

how, when and to whom it could sell power generated by these facilities.29 In El Paso, 

we further found that, under the contractual arrangement at issue there, Enron entered 

into contracts for El Paso Electric at Enron’s sole discretion, that Enron at times took title 

to El Paso Electric’s power, and that Enron had direct control over the quantity, 

availability and pricing of wholesale power by a competitor, including the power to 

 

27 Id. at 7.

28 Order No. 652, FERC Stats. & Regs. ¶ 31,175 at P 47.

29 El Paso, 108 FERC ¶ 61,071 at P 14.
Docket No. RM04-14-001 - 9 -

withhold it from the market.30 Thus, the definition of control in both El Paso and Order 

No. 652 is consistent with the criteria for control that Constellation suggests because 

Enron was empowered to unilaterally determine at times how, when and to whom El 

Paso Electric’s output would be sold.31 

18. We are also not persuaded by Constellation’s argument that the definition of 

control in Order No. 652 may inappropriately cover contracts where an entity is acting as 

an agent providing scheduling and dispatch services or where it is brokering or marketing 

the output. An agent or a broker acts on behalf of a client, and the client ultimately 

decides whether to enter a transaction and the price. Thus, to the extent that a contract 

does not give an entity, such as an agent or a broker, control over the capacity such that 

the agent or broker can affect the ability of the capacity to reach the relevant market, the 

agent or broker under such a contract would not be deemed to have control for purposes 

of the change in status reporting requirement. Because the relationship between Enron 

and El Paso Electric did not have these characteristics, the Commission specifically 

found in El Paso that Enron was not acting as an agent or as a broker.32 Finally, contrary 

to Constellation’s assertion, we explained in Order No. 652 that the definition of control 

there is fully consistent with the notion of operational control in the April 14 and July 8 

Orders.33 

19. We also reject EPSA’s request for clarification because it is unclear as to what 

would constitute “full decision-making authority” and how this compares with the 

definition of control that the Commission has established in Order No. 652, and in related 

orders such as the April 14 and July 8 Orders and the Merger Policy Statement. As 

EPSA notes, there are a wide range of commercial arrangements in the energy industry, 

and new types of arrangements are constantly being developed. Thus, it is not possible to 

predict every contractual agreement that could result in a change of control of an asset. 

To fulfill our statutory market oversight duties, we must retain the flexibility to adapt our 

rules to this rapidly-evolving market. The change in status reporting requirement allows 

the Commission to gather information on the prevalence of these new types of 

contractual arrangements to aid us in our assessment of their competitive effects. After 

the Commission has gained greater familiarity with these arrangements, we will be in a 

 

30 Id. at P 8, 16.

31 Constellation states that the definition of control must include: (i) the ability of 

the market-based rate applicant to direct generation output; and (ii) the authority of the 

market-based rate applicant to unilaterally determine such direction. Constellation 

Rehearing Request at 8.

32 Enron Power Marketing, Inc., 104 FERC ¶ 63,010 at P 46, 48 (2003).

33 Order No. 652, FERC Stats. & Regs. ¶ 31,175 at P 47-48.
Docket No. RM04-14-001 - 10 -

position to determine which types of arrangements are problematic and, if appropriate, to 

exempt from the reporting requirement classes of agreements that are not.

20. We will grant in part and reject in part Reliant’s request for clarification as to the 

treatment of tolling agreements, energy-only purchases, capacity credits and master 

agreements. First, in Order No. 652, we rejected requests that we take a laundry list 

approach to reportable arrangements by designating that all contracts or arrangements in 

certain categories must be reported, while other categories need not be. The decisive 

factor is whether the contract or other arrangement constitutes a change in control. In 

addition, with regard to Reliant’s request that the Commission clarify that the purchaser 

of generation capacity who had a contractual right to call on the generation capacity has 

control over the generation regardless of whether it chooses to exercise its rights, Reliant 

has not provided sufficient information to so clarify. Such a determination would depend 

on the specific facts and the terms and conditions of the particular contract. However, we 

will clarify that such a contract would be reportable under Order No. 652 to the extent 

that it transfers control of jurisdictional facilities. With respect to capacity credits as 

described by Reliant, the contracts or arrangements would not be reportable to the extent 

that they do not confer control on the purchaser. 

21. We will also reject Reliant’s request that each transaction entered into under a 

master agreement, which is effectively a single, integrated agreement, may be treated 

separately for the purposes of determining the duration of the agreement. Reliant has 

provided no support for its contention that such agreements that allow for multiple 

transactions, each with a duration of less than a year, under a single, integrated agreement 

should be treated any differently than a contract with the same total duration and 

economic effects that is structured as a single transaction.34 Furthermore, Reliant’s 

suggestion would simply provide market-based rate sellers with the incentive to structure 

otherwise reportable contracts to avoid Order No. 652’s reporting requirements, 

distorting the market and undermining the Commission’s ability to perform its statutory 

duty of market oversight. We do, however, recognize that the duration of such 

agreements is inherently uncertain. Accordingly, we clarify that, for the purposes of 

Order No. 652’s reporting requirement, the duration of the agreement is the maximum 

period contemplated by the agreement. If the duration is unspecified or indefinite, then 

 

34 See, e.g., Clarksdale Public Utilities Commission v. Entergy Services, Inc., 

85 FERC ¶ 61,268 at 62,078-79 (1998) (the Commission noted that its then-existing 

filing requirement for long-term contracts, which applied to contracts of a year or more,

“is determined by the actual length of the transaction, i.e., the substance of the power 

supply arrangement, and not the number of agreements used to document the transaction. 

Documenting one three-year agreement in three, separate one-year agreements does not 

alter the fact that long-term power sales agreements must be filed with the 

Commission.”).
Docket No. RM04-14-001 - 11 -

the duration of the master agreement should be treated as a year or more and thus 

reportable, provided that it satisfies the other requirements of Order No. 652 (e.g., change 

in control). However, we note that discrete transactions are to be treated separately, 

provided that they are not merely a series of back-to-back trades and do not constitute a 

single, integrated transaction.

Other Reportable Arrangements

Rehearing Requests

22. With respect to Order No. 652’s discussion of other reportable arrangements, EEI 

notes that the Commission appears to have inadvertently included fuel supply as a 

reportable item.

35 EEI seeks clarification that, consistent with the Commission’s earlier 

determination in Order No. 652 to exclude the reporting of fuel supplies, the inclusion of 

the phrase “fuel supply” under other reportable arrangements was an error and that 

changes relating to fuel supply are not a reportable change in status.36

Commission Determination

23. We clarify that the inclusion of “fuel supply” arrangements as an example of other 

reportable arrangements was intended and was not an error. Fuel supply arrangements 

were included in the list of agreements that are subject to the change in status reporting 

requirement to the extent that they allow for a transfer of control of jurisdictional assets.

37

 

In fact, as EEI correctly notes, we explicitly stated that fuel supply agreements, just like 

any other type of contractual arrangement, are reportable to the extent that they transfer

control over jurisdictional facilities. Accordingly, agreements relating to fuel supplies 

 

35 EEI cites Order No. 652, FERC Stats. & Regs. ¶ 31,175 at P 83:

Therefore, we clarify that agreements that relate to operation (including 

scheduling and dispatch), maintenance, fuel supply, risk management, and 

marketing that transfer the control of jurisdictional assets are subject to the change 

in status reporting requirement.

36 EEI Rehearing Request at 7-8.

37 Order No. 652, FERC Stats. & Regs. ¶ 31,175 at P 83. As the Commission 

stated, “[t]hese types of arrangements have been referred to as energy management 

agreements, asset management agreements, tolling agreements, and scheduling and 

dispatching agreements.” In the July 8 Order, we noted that “if an applicant has control 

over certain capacity such that the applicant can affect the ability of that capacity to reach 

the relevant market, then that capacity should be attributed to the applicant when 

performing the screens.” July 8 Order, 108 FERC ¶ 61,026 at P 65. 
Docket No. RM04-14-001 - 12 -

(e.g., tolling agreements) that are structured in such a way that they transfer control over 

a jurisdictional facility to the supplier would be reportable, regardless of how they are 

characterized.

38 Thus, our decision in Order No. 652 not to expand the definition of what 

constitutes an input to electric power production to include fuel supplies was not intended

to imply that fuel supply agreements are never reportable.

39

Materiality Threshold

Rehearing Request

24. With respect to the materiality threshold adopted in Order No. 652, various entities 

urge the Commission to clarify that the reporting requirement is triggered only by net, 

rather than gross, increases in generation capacity of 100 MW or more. For example, 

EPSA suggests that capacity decreases associated with changes in generation capacity or 

expiration of capacity under long-term purchase contracts should be netted against 

generation capacity increases to determine whether the 100 MW materiality threshold has 

been reached.40 Reliant asserts that the netting approach is appropriate because a

threshold calculation based purely on increases in controlled capacity that does not take 

into account corresponding decreases (for example, re-sales of purchased capacity) does 

 

38 For example, under a tolling arrangement, a gas supplier could receive the 

output of a gas-fired generator as payment for the gas it supplies to the generator. If the 

gas supplier is the only supplier to that generator, then the gas supplier could effectively 

control the generator. Revised Filing Requirements Under Part 33 of the Commission’s 

Regulations, Order No. 642, 65 Fed. Reg. 70,983 (2000), FERC Stats. & Regs., 

Regulations Preambles July 1996-December 2000 ¶ 31,111 at 31,877 n. 17 (2000), order 

on reh’g, Order No. 642-A, 66 Fed. Reg. 16,121 (2001), 94 FERC ¶ 61,289 (2001).

39 In Order No. 652, we noted that the Commission’s general practice has been to 

require market-based rate sellers to submit a change in status report when they obtained 

ownership of new inputs to electric power production, other than fuel supplies. Although 

we proposed in the NOPR to eliminate the exclusion of fuel supplies, after careful 

consideration of the comments, we decided to not to make any changes to our precedent 

as to what constitutes an input to electric power production, including expanding the 

definition to include fuel supplies. Instead, we said we would provide interested parties 

an opportunity to propose modifications to this approach in the generic rulemaking 

proceeding in Docket No. RM04-7-000. Order No. 652, FERC Stats. & Regs. ¶ 31,175 

at P 58.

40 EPSA Rehearing Request at 5.
Docket No. RM04-14-001 - 13 -

not accurately quantify the capacity sellers control.41 EEI argues that de-rates and uprates should also be netted prior to determining whether reporting is required.42

 

Commission Determination

25. We will grant the requests above to adopt a netting approach in determining 

whether the materiality threshold has been reached, subject to the cumulative 100 MW 

threshold. 

Inclusion of Reporting Requirement in Market-Based Rate Tariffs

Rehearing Requests

26. With respect to Order No. 652’s requirement that all market-based rate sellers 

incorporate into their market-based rate tariffs the change in status reporting requirement, 

EPSA and Reliant request that the Commission provide specific language. Reliant 

asserts that adopting specific language to be used by all sellers will eliminate uncertainty 

associated with compliance and will create uniformity and eliminate the administrative 

burden on Commission Staff associated with analyzing hundreds of differently-worded 

attempts at compliance with Order No. 652.

43

Commission Determination

27. We will grant the clarification regarding pro forma tariff language requested by 

EPSA and Reliant. Market-based rate sellers satisfy their obligation in this regard by 

incorporating into their market-based rate tariff the following provision, which we have 

directed market-based rate sellers to include in their tariff in orders issued after the 

effective date of Order No. 652:

[insert market-based rate seller name] must timely report to the Commission any 

change in status that would reflect a departure from the characteristics the 

Commission relied upon in granting market-based rate authority. A change in 

status includes, but is not limited to, each of the following: (i) ownership or 

control of generation or transmission facilities or inputs to electric power 

production other than fuel supplies, or (ii) affiliation with any entity not disclosed 

in the application for market-based rate authority that owns or controls generation 

or transmission facilities or inputs to electric power production, or affiliation with 

 

41 Reliant Rehearing Request at 4.

42 EEI Rehearing Request at 6.

43 Reliant Rehearing Request at 12.
Docket No. RM04-14-001 - 14 -

any entity that has a franchised service area. Any change in status must be filed 

no later than 30 days after the change in status occurs.44

Reporting Period/Timing

Rehearing Requests

28. A number of entities sought clarification as to the reporting period for filing the 

change in status reports. EEI and Reliant seek clarification as to whether a change in 

control over generation capacity associated with a wholesale power sales contract or a 

contract providing for future commencement of delivery occurs becomes reportable on

the date of physical delivery, i.e., the commencement date, rather than the execution 

date.

45 According to EEI, this clarification would be consistent with the Commission’s 

treatment of contracts under the Electric Quarterly Report requirements.46 

29. EEI also notes that, due to the restrictions on sharing market information under the 

code of conduct, until such time as the traditional utility affiliate submits its own change 

in status filing, the merchant affiliate will not know that this type of non-public change in 

status event has occurred. EEI thus requests clarification that the reporting deadline 

applicable to the merchant affiliate is thirty days from the date that the traditional utility 

submits a change in status filing to the Commission.47

30. EPSA and Reliant both seek clarification that a market-based rate seller is only 

required to file a change in status report upon the occurrence of a triggering event that 

occurs after the effective date of Order No. 652.48

Commission Determination

31. In response to the request of EEI and EPSA, we reiterate here that a change in 

status in which control over generation facilities is transferred must be reported within

30 days after the legal or effective date of the contract by which control is transferred.49 

 

44 See, e.g., Delta Energy Center, LLC, 111 FERC ¶ 61,023 (2005); First Energy 

Operating Companies, 111 FERC ¶ 61,032 (2005).

45 Reliant Rehearing Request at 6.

46 EEI Rehearing Request at 5.

47 Id. at 8-9.

48 EPSA Comment at 3; Reliant Rehearing Request at 8.

49 Order No. 652, FERC Stats. & Regs. ¶ 31,175 at P 106.
Docket No. RM04-14-001 - 15 -

It is irrelevant for the purposes of compliance with the reporting obligation if the 

effective date on which control is transferred occurs prior to the date on which the 

purchaser is contractually bound to commence physical delivery. Parties are, of course, 

free to file reports of prospective changes.

32. We will reject as misplaced EEI’s request for clarification regarding the reporting 

obligations of merchant affiliates. In Order No. 652, we stated that the various affiliates 

within a corporate family may submit a single notice for the corporate family as a whole 

for each reportable change in status that occurs, listing all affiliated companies holding 

market-based rate authority in such notice.

50 Consequently, the merchant affiliates in the 

situation described by EEI would not be obligated to separately report the traditional 

utility’s change in status.

33. We will reject EPSA and Reliant’s request for clarification that a market-based 

rate seller is only required to file a change in status report upon the occurrence of a 

triggering event that occurs after the effective date of Order No. 652. Market-based rate 

sellers were already subject to the change in status reporting obligation prior to the 

issuance of Order No. 652. However, since Order No. 652 introduced the requirement 

that such changes be reported within 30 days after the occurrence of the change in status, 

we will clarify that changes in status occurring before the effective date of Order No. 652 

are not subject to the 30-day reporting requirement. Instead, with respect to such changes 

in status, market-based rate sellers are subject to their pre-existing reporting obligations. 

Furthermore, as discussed above, market-based rate sellers need not report changes in 

status that the Commission has already been taken into account in an initial application or

in a subsequent triennial review.

Other Issues: Barriers to Entry

Rehearing Requests

34. Finally, Reliant request clarification as to whether the Commission considers 

capacity held by a Seller on an interstate or intrastate pipeline to be a potential barrier to 

entry, and, if so, whether there is a materiality threshold below which reporting of such 

capacity is not required. Reliant argues that the capacity held on interstate pipelines 

should not be reportable because the Commission’s rules, which require posting of 

unused capacity, prevent withholding or other market abuse.51

 

50 Id. at P 51.

51 Reliant Rehearing Request at 11.
Docket No. RM04-14-001 - 16 -

Commission Determination

35. Natural gas pipelines have traditionally been treated as inputs to electric power 

production, and Order No. 652 did not change their treatment. Accordingly, where a 

market-based rate seller acquires ownership or control over such inputs or becomes 

affiliated with an entity that owns or controls intrastate natural gas pipelines or storage 

facilities, this is a reportable change in status.52 The mere acquisition of capacity on a 

pipeline that is owned or controlled by a non-affiliated entity does not constitute a 

reportable change in status. Further, acquisition of ownership or control or affiliation 

with an interstate natural gas pipeline would not be a reportable change in status. As the 

Commission has explained, affiliation with an interstate natural gas pipeline does not 

raise market power concerns because the pipeline is subject to the Commission’s open 

access requirements for natural gas pipelines.

53

 

The Commission orders:

The requests for rehearing and clarification of Order No. 652 are hereby granted in 

part and denied in part, as discussed in the body of this order.

By the Commission.

( S E A L )

Magalie R. Salas,

Secretary.

 

52 See, e.g. Louisville Gas & Electric Co., 62 FERC ¶ 61,106 at 61,148 (1993) 

53 See Vantus Energy Corporation, 73 FERC ¶ 61,099 (1995); Enron Power 

Marketing, Inc., 65 FERC ¶ 61,305 (1993).