134 FERC ¶ 61,046 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Jon Wellinghoff, Chairman; 

 Marc Spitzer, Philip D. Moeller, 

 John R. Norris, and Cheryl A. LaFleur. 

Market-Based Rates for Wholesale Sales Docket No. RM04-7-009 

of Electric Energy, Capacity and Ancillary 

Services By Public Utilities 

ORDER DENYING REHEARING 

AND MOTION FOR STAY AND RESCISSION 

(Issued January 20, 2011) 

1. On May 17, 2010, the Edison Electric Institute (EEI) filed a motion for stay or 

rescission and a request for rehearing of the Commission’s April 15, 2010 order 

addressing the Compliance Working Group’s request for clarification of the market-based 

rate affiliate restrictions.1

 In this order, we deny EEI’s motion for stay or rescission of 

the April 15 Clarification Order and deny rehearing of that order, as discussed below.2

 

 

(continued....) 

1 Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and 

Ancillary Services by Public Utilities, 131 FERC ¶ 61,021 (2010) (April 15 Clarification 

Order). 

2

 According to the electronic time stamp of EEI’s electronic filing, EEI submitted 

its request for rehearing fifteen seconds after the Commission’s official 5:00 pm close of 

business (18 C.F.R. § 375.101(c) (2010)) on the date that requests for rehearing were due 

in this case. However, it has since been determined that, at the time that EEI submitted 

its request for rehearing, the electronic time stamp on the Commission’s server was 

incorrect. Accordingly, we will accept EEI’s request for rehearing as timely submitted. 

Since that time, the Commission has put in place processes to regularly check the 

accuracy of its server’s time. Additionally, current Commission time is now displayed 

during the eFiling submission process so that filers know the Commission’s time as they 

make their filing. Moreover, for every electronic filing, an electronic receipt is provided 

that shows the time the filing was made, and thus whether the filing was (or was not) 

timely made. With these protections in place, the Commission will rely on its electronic 

time stamp as to the date and time for determining whether electronic requests for 
Docket No. RM04-7-009 - 2 - 

In addition, in an order issued concurrently with this order, we are withdrawing the 

Notice of Proposed Rulemaking in Docket No. RM10-20-000.3

I. Background

2. In Order No. 697, the Commission adopted affiliate restrictions that govern the 

relationship between franchised public utilities with captive customers and their “marketregulated” power sales affiliates, i.e., affiliates whose power sales are regulated in whole 

or in part at market-based rates.4

 These affiliate restrictions govern the separation of 

functions, the sharing of market information, sales of non-power goods or services, and 

power brokering. The Commission requires that, as a condition of receiving and 

retaining market-based rate authority, sellers comply with these affiliate restrictions 

unless explicitly permitted by Commission rule or order granting waiver of the affiliate 

restrictions. Failure to satisfy the conditions set forth in these affiliate restrictions 

constitutes a violation of a seller’s market-based rate tariff.5

3. Under the separation of functions requirement in the market-based rate affiliate 

restrictions, employees of market-regulated power sales affiliates must operate 

separately, to the maximum extent practical, from employees of affiliated franchised 

public utilities with captive customers.6

 Order No. 697 provides for exceptions to the 

separation of functions requirement for certain categories of employees who are 

 

rehearing are submitted untimely after close of business on the date that such filings are 

due. E.g., Midwest Independent Transmission System Operator, Inc., 112 FERC 

¶ 61,211, at P 10 (2005); Pacific Gas and Electric Co. v. Delta Energy Center, LLC, 

116 FERC ¶ 61,207, at 61,866-67 (2006); North American Electric Reliability Corp., 

130 FERC ¶ 61,002, at P 12 (2010); accord Boston Gas Co. v. FERC, 575 F.2d 975, 977-

79 (1st Cir. 1978); City of Campbell v. FERC, 770 F.2d 1180, 1183 (D.C. Cir. 1985). 

3 Market-Based Rate Affiliate Restrictions, 134 FERC ¶ 61,047 (2011). 

4 Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and 

Ancillary Services by Public Utilities, Order No. 697, FERC Stats. & Regs. ¶ 31,252, at 

P 467, 490, clarified, 121 FERC ¶ 61,260 (2007), order on reh’g, Order No. 697-A, 

FERC Stats. & Regs. ¶ 31,268, clarified, 124 FERC ¶ 61,055, order on reh’g, Order No. 

697-B, FERC Stats. & Regs. ¶ 31,285 (2008), order on reh’g, Order No. 697-C, FERC 

Stats. & Regs. ¶ 31,291 (2009), order on reh’g, Order No. 697-D, FERC Stats. & Regs. 

¶ 31,305 (2010). 

5

 Order No. 697, FERC Stats. & Regs. ¶ 31,252 at P 549-550. 

6

 18 C.F.R. § 35.39(c)(2)(i) (2010). 
Docket No. RM04-7-009 - 3 - 

permitted to be shared and gives examples of permissibly “shared employees.”7

 

For instance, in Order No. 697, the Commission, referencing Order No. 2004, concluded 

that senior officers and members of boards of directors that do not participate in 

“directing, organizing or executing generation or market functions” would not be subject 

to the separation of functions.8

4. Following issuance of Order No. 697, the Commission issued Order No. 717, the 

Standards of Conduct Final Rule.9

 The Standards of Conduct Final Rule adopted an 

employee functional approach for purposes of the Commission’s Standards of Conduct. 

The employee functional approach rendered continuation of the concept of “shared 

employees” unnecessary under the Standards of Conduct because only those individuals 

who engage in transmission functions or marketing functions are required to function 

independently from one another.10 

5. On March 9, 2009, the Compliance Working Group submitted a request for 

clarification in the Commission’s market-based rate rulemaking proceeding regarding 

which employees can be shared for purposes of compliance with the Commission’s 

market-based rate affiliate restrictions. Specifically, the Compliance Working Group 

requested that the Commission interpret its market-based rate affiliate restrictions to 

permit sharing of employees who are neither “transmission function employees” nor 

 7

 Order No. 697, FERC Stats. & Regs. ¶ 31,252 at P 561-566 (citing Standards of 

Conduct for Transmission Providers, Order No. 2004, FERC Stats. & Regs. ¶ 31,155, at 

P 96, 99-101, 145-146 (2003), order on reh’g, Order No. 2004-A, FERC Stats. & Regs. 

¶ 31,161, at P 134, order on reh’g, Order No. 2004-B, FERC Stats. & Regs. ¶ 31,166, 

order on reh’g, Order No. 2004-C, FERC Stats. & Regs. ¶ 31,172 (2004), order on reh’g, 

Order No. 2004-D, 110 FERC ¶ 61,320 (2005), vacated and remanded as it applies to 

natural gas pipelines sub nom. National Fuel Gas Supply Corp. v. FERC, 468 F.3d 831 

(D.C. Cir. 2006)). 

8 Id. P 562 (citing 18 C.F.R. § 358.4(a)(5)). Like the affiliate restrictions in Order 

No. 697, the Order No. 2004 Standards of Conduct required the separation of corporate 

or business unit functions, but permitted certain categories of employees to be shared. 

9 Standards of Conduct for Transmission Providers, Order No. 717, FERC Stats. 

& Regs. ¶ 31,280 (2008) (Standards of Conduct Final Rule), order on reh’g, Order No. 

717-A, FERC Stats. & Regs. ¶ 31,297, order on reh’g, Order No. 717-B, 129 FERC 

¶ 61,123 (2009). 

10 Standards of Conduct Final Rule, FERC Stats. & Regs. ¶ 31,280 at P 129. 
Docket No. RM04-7-009 - 4 - 

“marketing function employees” under the Standards of Conduct Final Rule.11 The 

Compliance Working Group submitted that shared employees under the affiliate 

restrictions are defined by reference to shared employees under the Order No. 2004-era 

Standards of Conduct. It added that as of the effective date of the Standards of Conduct 

Final Rule, November 26, 2008, the concept of shared employees is no longer applied in 

the Standards of Conduct context. In its March 9, 2009 request for clarification, the 

Compliance Working Group argued that this created a compliance conundrum that 

needed to be addressed in order to enable companies and their employees to understand, 

and comply with, the affiliate restrictions. 

6. In the April 15 Clarification Order, the Commission provided guidance regarding 

which employees may not be shared under the market-based rate affiliate restrictions 

codified in Order No. 697. Concurrently, the Commission issued a Notice of Proposed 

Rulemaking in Docket No. RM10-20-000 in which it proposed to revise the affiliate 

restrictions in order to reflect the guidance provided in the April 15 Clarification Order.12

7. The April 15 Clarification Order denied the Compliance Working Group’s request 

that the Commission interpret the affiliate restrictions adopted in Order No. 697 to permit 

the sharing of employees who are neither “transmission function employees” nor 

“marketing function employees” under the Standards of Conduct Final Rule. However, 

in order to address the Compliance Working Group’s concerns regarding compliance 

with the market-based rate affiliate restrictions, the Commission provided guidance 

regarding which employees may not be shared under the affiliate restrictions. 

Specifically, the Commission rejected the Compliance Working Group’s interpretation of 

the market-based rate affiliate restrictions because the Compliance Working Group’s 

interpretation would permit the sharing of employees who are prohibited from being 

shared under the market-based rate affiliate restrictions (for instance, employees that 

make economic dispatch decisions or that determine the timing of scheduled outages). 

Thus, the Commission explained that granting the Compliance Working Group’s 

requested interpretation would permit market-based rate sellers to share employees that 

may not currently be shared under the affiliate restrictions. The April 15 Clarification 

Order also explained that “marketing function employee” is not a defined term in the 

market-based rate regulations adopted in Order No. 697, and explained that the 

 11 “Transmission function employee” and “marketing function employee” are 

defined terms under the Standards of Conduct. See 18 C.F.R. §§ 358.3(d), 358.3(i) 

(2010). 

12 Market-Based Rate Affiliate Restrictions, 75 FR 20796 (Apr. 22, 2010), Notice 

of Proposed Rulemaking, FERC Stats. & Regs. ¶ 32,567 (2010) (NOPR). 
Docket No. RM04-7-009 - 5 - 

restrictions on which employees may be shared under the market-based rate affiliate 

restrictions are not limited to those employees who are engaged in sales.13

8. Consistent with the Commission’s determinations in Order No. 697-A, the 

Commission clarified in the April 15 Clarification Order that, for purposes of compliance 

with the affiliate restrictions, a franchised public utility with captive customers and its 

market-regulated power sales affiliates may not share employees that make economic 

dispatch decisions or that determine the timing of scheduled outages.14 The Commission 

also clarified that franchised public utilities with captive customers are prohibited from 

sharing employees that engage in resource planning15 or fuel procurement with their 

market-regulated power sales affiliates. The Commission reasoned that if a franchised 

public utility and its market-regulated power sales affiliate were permitted to share 

employees that make strategic decisions about future generation supply, such strategic 

decision-making by a shared employee could result in generation being built or acquired 

for the benefit of the market-regulated power sales affiliate and at the expense of the 

captive customers of the franchised public utility. With respect to the prohibition against 

sharing fuel procurement employees, the Commission explained that shared fuel 

procurement employees may have the incentive to allocate purchases of lower priced fuel 

supplies to the market-regulated power sales affiliate while allocating purchases of higher 

priced fuel supplies to the franchised public utility.16

 13 Under the Standards of Conduct regulations, “marketing function employee” is 

defined as “an employee, contractor, consultant or agent of a transmission provider or of 

an affiliate of a transmission provider who actively and personally engages on a day-today basis in marketing functions.” 18 CFR 358.3(d) (2010). “Marketing functions” 

means “in the case of public utilities and their affiliates, the sale for resale in interstate 

commerce, or the submission of offers to sell in interstate commerce, of electric energy or 

capacity, demand response, virtual transactions, or financial or physical transmission 

rights, all as subject to an exclusion for bundled retail sales, including sales of electric 

energy made by providers of last resort. . . .” 18 CFR 358.3(c) (2010). As the 

Commission stated in the April 15 Clarification Order, the Standards of Conduct 

definition of “marketing function employee” may be read to be limited to those 

employees engaged in sales. 

14 Order No. 697-A, FERC Stats. & Regs. ¶ 31,268 at P 253. 

15 The prohibition on sharing employees that engage in resource planning applies 

only to the sharing of employees between a franchised public utility and its marketregulated power sales affiliate, and is not intended to alter resource planning activities by 

transmission providers that are permitted under the Standards of Conduct Final Rule. 

16 April 15 Clarification Order, 131 FERC ¶ 61,021 at P 42. 
Docket No. RM04-7-009 - 6 - 

9. On April 21, 2010, EEI submitted a request for an extension of time to comply in 

which it requested an expedited determination that the guidance provided in the April 15 

Clarification Order will not be subject to enforcement unless and until the Commission 

issues a final rule pursuant to the NOPR. 

10. On May 18, 2010, EEI filed a motion for stay or rescission, or, in the alternative, 

rehearing of the April 15 Clarification Order. 

11. As discussed in the order withdrawing the NOPR issued concurrently with this 

order, on June 21, 2010, EEI, Dominion Resources Services, Inc. (Dominion), Ameren 

Services Company (Ameren), Duke Energy Corporation (Duke), Entergy Services, Inc. 

(Entergy), and the Nuclear Energy Institute (NEI) filed comments opposing the NOPR’s 

proposed codification of the clarifications provided in Commission’s April 15 

Clarification Order. The Transmission Access Policy Study Group (TAPS) submitted 

comments supporting the proposal. The Compliance Working Group did not submit 

comments on the NOPR. 

12. On July 2, 2010, the Commission issued an order granting in part EEI’s request for 

an extension of time.17 In particular, the Commission granted EEI’s request for an 

extension of time to comply with the guidance provided in the April 15 Clarification 

Order regarding employees that engage in fuel procurement or resource planning until 

such time as the Commission issues a final rule in the NOPR proceeding. The 

Commission denied EEI’s request, however, with respect to employees who engage in 

economic dispatch or who determine the timing of scheduled outages on the basis that the 

Commission had explicitly prohibited the sharing of such employees in Order No. 697-

A.18

II. EEI’s Motion for Stay or Rescission and Request for Rehearing

13. In its motion for stay or rescission and request for rehearing of the April 15 

Clarification Order, EEI argues that the Commission erred by issuing the Clarification 

Order on the same day that it issued the NOPR. According to EEI, by creating a “brightline” rule in the April 15 Clarification Order that certain employees cannot be shared at 

the same time that it issued the NOPR proposing to codify this rule, the Commission 

failed to provide the public with an effective opportunity to provide input prior to the 

 17 Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and 

Ancillary Services By Public Utilities, 132 FERC ¶ 61,014, at P 4-5 (2010) (Order 

Granting Extension of Time In Part). 

18 Id. P 4 (citing Order No. 697-A, FERC Stats. & Regs. ¶ 31,268 at P 253). 
Docket No. RM04-7-009 - 7 - 

implementation of the proposed rule.19 EEI argues that in doing so, the Commission 

suggested that it has predetermined the outcome of the rulemaking.20 In addition, EEI 

argues that the April 15 Clarification Order violates the principle articulated in National 

Fuel Gas Supply Corp. v. FERC because the order imposes new restrictions on the 

sharing of employees, but does not show how the potential dangers of affiliate abuse 

justify the Commission’s new restrictions on the sharing of employees that engage in fuel 

procurement or resource planning.21 

14. EEI maintains that the April 15 Clarification Order represents a departure from 

prior Commission precedent insofar as its pronouncements on the sharing of dispatch, 

outage, fuel procurement, and resource planning employees are stated as blanket 

exclusions, and that the Commission has failed to explain or justify this departure.22 EEI 

contends that although the Commission “constrained” the sharing of economic dispatch 

and outage scheduling employees in Order No. 697-A,23 the Commission has granted 

waivers and issued no-action letters permitting the sharing of such employees in some 

circumstances.24 EEI maintains that the April 15 Clarification Order calls into question 

the continuing validity of the practices of entities that have followed the guidance 

provided in these no-action letters and waiver orders. Similarly, EEI states that it has 

“understood that ‘traditional’ resource planning employees who make direct resource 

planning decisions” cannot be shared, but argues that the April 15 Clarification Order is 

written so broadly that it could inadvertently prevent the “use of shared-services 

employees ... [that] provide inputs and other support to the resource planning process, 

such as accounting, engineering, environmental, finance, legal, and real estate inputs.”25 

EEI contends that the affiliate restrictions currently permit the sharing of support, field 

and maintenance employees, which EEI states “include such shared services staff who 

provide inputs to the resource planning process.”26 With respect to the sharing of fuel 

procurement employees, EEI argues that the Commission has not previously prohibited 

 19 EEI Request for Rehearing at 2. 

20 Id. at 4. 

21 Id. at 10-11 (citing 468 F.3d 831 (D.C. Cir. 2006) (National Fuel)). 

22 Id. at 4-5, 8, 10. 

23 Id. at 8 (Order No. 697-A, FERC Stats. & Regs. ¶ 31,268 at P 253). 

24 Id. (citing Allegheny Energy, Inc., 119 FERC ¶ 61,025 (2007)). 

25 Id. at 9. 

26 Id. (citing 18 C.F.R. § 35.39(c)(2) (2010)). 
Docket No. RM04-7-009 - 8 - 

the sharing of such employees, arguing that the Office of the General Counsel has 

previously authorized the sharing of such employees in certain contexts.27 

15. Thus, to address its concerns about the April 15 Clarification Order, and to avoid 

prejudging the outcome of the rulemaking, EEI argues that the Commission should stay 

enforcement of the April 15 Clarification Order pending the completion of the 

rulemaking, or rescind the order as premature, so that the issues EEI raises can be 

addressed in the rulemaking.28 EEI argues that by staying or rescinding the April 15 

Clarification Order, the Commission would be returning to the status quo of the affiliate 

restrictions and prior orders, which “generally prevent the sharing of economic dispatch 

and outage schedulers ... and staff who make decisions as to new generation and energy 

supply resources.”29 EEI contends that in the interim, the Commission should allow 

companies to rely on guidance set forth in prior regulations, orders, and other guidance 

regarding the separation of dispatch, outage, fuel procurement, and resource planning 

employees.30 EEI also asserts that a number of the pronouncements in the April 15 

Clarification Order and the NOPR go well beyond “an interpretative order,” and will 

have far reaching impacts, and should not be adopted without a notice-and-comment 

rulemaking process.31 EEI contends that, at a minimum, the Commission should stay or 

rescind conclusions in the April 15 Clarification Order relating to the prohibitions against 

the sharing of fuel procurement or resource planning employees. 

16. EEI also argues that developing any changes to the Commission’s regulations 

through the rulemaking instead of through this proceeding will better ensure that any 

restrictions are reasonable, based on a sufficient evidentiary basis, and are narrowly 

tailored to avoid losing the benefits associated with the sharing of employees where the 

 27 Id. at 9-10 (citing Entergy Corp., No-Action Letter, Docket No. NL07-4-000 

(Feb. 8, 2007); Repeal of the Public Utility Holding Company Act of 1935 and Enactment 

of the Public Utility Holding Company Act of 2005, Order No. 667, FERC Stats. & Regs. 

¶ 31,197 (2005), order on reh’g, Order No. 667-A, FERC Stats. & Regs. ¶ 31,213, order 

on reh’g, Order No. 667-B, FERC Stats. & Regs. ¶ 31,224 (2006), order on reh’g, Order 

No. 667-C, 118 FERC ¶ 61,133 (2007); Cross-Subsidization Restrictions on Affiliate 

Transactions, Order No. 707, FERC Stats. & Regs. ¶ 31,264 (2008), order on reh’g, 

Order No. 707-A, FERC Stats. & Regs. ¶ 31,272 (2008)). 

28 Id. at 11-13. 

29 Id. at 13, 15 (citing Order No. 667, FERC Stats. & Regs. ¶ 31,197; Order 

No. 697, FERC Stats. & Regs. ¶ 31,252; Order No. 707, FERC Stats. & Regs. ¶ 31,264). 

30 Id. at 11. 

31 Id. at 13. 
Docket No. RM04-7-009 - 9 - 

risk of harm to captive customers is unlikely.32 EEI also argues that the rulemaking 

should focus on whether any additional restrictions on fuel procurement and resource 

planning beyond those already in place prior to the April 15 Clarification Order are 

necessary to protect captive customers, and whether more carefully worded provisions 

than those proposed would address the Commission’s concerns.33 

17. Further, EEI argues that if the Commission does not stay or rescind the April 15 

Clarification Order, the Commission should grant rehearing of the order and provide 

clarification in several respects. First, EEI requests that the Commission clarify that 

franchised public utilities with captive customers and their market-regulated power sales 

affiliates can share employees that perform economic dispatch and outage scheduling 

functions in circumstances where the utility and its affiliate jointly own a shared 

generating plant or unit operated by a franchised public utility with captive customers, 

and are abiding by guidance provided by the Commission or its staff regarding co-owned 

generating plants.34 Second, EEI asserts that the Commission should clarify that 

franchised public utilities and their market-regulated power sales affiliates may share 

employees that provide service functions to the resource planning process such as 

accounting, engineering, environmental, finance, legal, operations, maintenance, 

permitting, real estate, safety, and siting functions, so long as the employees do not make 

“economic decisions related to generation plant acquisitions.”35 EEI maintains that 

prohibiting the sharing of such employees would result in the unnecessary duplication of 

functions, which would increase the costs borne by ratepayers. EEI further maintains that 

the Commission’s existing regulations and state regulations already ensure that sharing of 

these functions does not result in cross-subsidization and argues that, at a minimum, the 

Commission needs to develop an adequate evidentiary record before it restricts the 

sharing of such employees.36

18. Third, EEI asks that the Commission clarify that franchised public utilities with 

captive customers and their market-regulated power sales affiliates that currently rely on 

a shared fuel procurement unit may continue to do so, so long as the Commission or a 

 32 Id. at 14-15 (citing National Fuel, 468 F.3d 831 (D.C. Cir. 2006)). 

33 Id. at 15. 

34 Id. at 6, 16. 

35 EEI notes that it assumes that the Commission does not mean to prohibit the 

sharing of senior executives responsible for overseeing overall corporate family activities 

and fiduciary responsibilities, including acquisitions of assets, finance, and operations. 

Id. at 17, n.19. 

36 Id. at 17-18.
Docket No. RM04-7-009 - 10 - 

state commission has approved the sharing of such employees or such sharing is 

consistent with no-action letters or other such guidance. According to EEI, employees 

engaged in joint fuel procurement are directly governed by the requirements of Order 

Nos. 667 and 707 and by applicable state orders and regulations, which already ensure 

that captive customers are protected. EEI contends that the Commission has failed to 

provide a basis for treating fuel procurement any differently from any other supply chain 

issue, arguing that if a franchised public utility and its market-regulated power sales 

affiliate purchase anything through an affiliate procurement entity, they will be subject to 

the Commission’s applicable affiliate regulations. EEI states that if the Commission 

determines, based on record evidence, that there is a legitimate concern that a shared fuel 

procurement employee will allocate lower-cost fuel supplies to the market-regulated 

affiliate, “the Commission could address this concern by imposing protective procedural 

requirements on any shared fuel procurement group.”37

19. Finally, EEI requests that the Commission clarify that franchised public utilities 

with captive customers and their market-regulated power sales affiliates “can continue to 

rely on No-Action letters, informal guidance, and other such documents that the 

Commission or its staff has issued authorizing the sharing of employees, assets (including 

generating plants), and/or functions even if those documents precede and depart from the 

April 15 [Clarification] Order and any final rule issued pursuant to the April 15 

NOPR.”38 EEI argues that if, as the Commission states, the April 15 Clarification Order 

merely clarifies existing rules, all of the Commission’s previous guidance should 

continue in effect without change.39 

III. Discussion

20. We reject EEI’s arguments that the Commission’s April 15 Clarification Order is a 

departure from prior Commission precedent. As discussed in the order withdrawing the 

NOPR that is being issued concurrently with this order,40 the separation of functions 

requirement in the existing regulations already requires that “[t]o the maximum extent 

practical, the employees of a market-regulated power sales affiliate must operate 

separately from the employees of any affiliated franchised public utility with captive 

customers.”41 Therefore, the clarifications provided in the April 15 Clarification Order 

 37 Id. at 18-20. 

38 Id. at 6, 20 (citing 18 C.F.R. § 35.39(a) (2010)). 

39 Id. at 20. 

40 Market-Based Rate Affiliate Restrictions, 134 FERC ¶ 61,047 (2011). 

41 18 C.F.R. § 35.39(c)(2)(i) (2010). 
Docket No. RM04-7-009 - 11 - 

that employees that determine the timing of scheduled outages, or that engage in 

economic dispatch, fuel procurement, or resource planning may not be shared is not a 

departure from Commission precedent. Further, the two exceptions noted above to these 

restrictions – for field and maintenance employees and senior officers – do not pertain to 

employees that perform these four functions. As stated in the order addressing EEI’s 

request to extend the time for compliance with the April 15 Clarification Order, the 

April 15 Clarification Order “was not intended to expand the existing market-based rate 

affiliate restrictions as codified in our existing regulations, but rather was intended to 

provide guidance to the industry as to how the Commission interprets and applies its 

existing market-based rate affiliate restriction regulations.”42

21. EEI’s argument that franchised public utilities with captive customers should be 

permitted to share employees that engage in economic dispatch or that determine the 

timing of scheduled outages with their market-regulated power sales affiliates is an 

attempt to re-litigate the Commission’s determination in Order No. 697-A that these 

employees may not be shared.43 We therefore deny EEI’s request that the Commission 

permit sharing of employees that engage in economic dispatch or that determine the 

timing of scheduled outages; the Commission previously explained in Order No. 697-A 

that “shared employees may not be involved in decisions regarding the marketing or sale 

of electricity from the facilities, may not make economic dispatch decisions, and may not 

determine the timing of scheduled outages for facilities.”44 With respect to EEI’s request 

that the Commission clarify that franchised public utilities with captive customers and 

their market-regulated power sales affiliates can share employees that perform economic 

dispatch and outage scheduling functions for co-owned generating plants, and are abiding 

by guidance provided by the Commission regarding co-owned generating plants, we 

clarify that franchised public utilities with captive customers and their market-regulated 

power sales affiliates may only share such employees if they have obtained a waiver from 

the Commission that is based on case-specific circumstances and representations made by 

the specific applicants for the waiver, and only if the waiver permits the sharing of such 

employees.45 

 

(continued....) 

42 Order Granting Extension of Time In Part, 132 FERC ¶ 61,014 at P 3. 

43 Order No. 697-A, FERC Stats. & Regs. ¶ 31,268 at P 253. This determination 

was not challenged on rehearing of Order No. 697-A. 

44 Id. 

45 See Cleco Power LLC, 130 FERC ¶ 61,102, at P 22-25 (2010) (granting limited 

waiver to permit sharing of employees that determine the timing of scheduled outages 

based on the conjoined nature of the facilities and the applicants’ representations that the 
Docket No. RM04-7-009 - 12 - 

22. With respect to EEI’s request that the Commission clarify that franchised public 

utilities and their market-regulated power sales affiliates may share employees that 

provide service functions to the resource planning process,46 we find that, absent a casespecific waiver, employees may be shared by a franchised public utility with captive 

customers and its market-regulated power sales affiliates only if they are included in the 

category of permissibly shared support employees set forth in Order Nos. 697 and 697-A. 

As explained in Order No. 697, permissibly shared employees “include those in legal, 

accounting, human resources, travel and information technology”47 and include field and 

maintenance employees that “perform purely manual, technical or mechanical duties that 

are supportive in nature and do not have planning or direct operational responsibilities.”48 

Field and maintenance employees include “technical and engineering personnel engaged 

in generation-related activities, provided that such employees do not themselves: (1) buy 

or sell energy; (2) make economic dispatch decisions; (3) determine (as opposed to 

implement) outage schedules; or (4) engage in power marketing activities.”49 As the 

Commission explained in Order No. 697, “[b]ecause permissibly shared employees may 

have access to market information, they are prohibited from acting as a conduit to 

provide market information to employees of the franchised public utility with captive 

customers....”50 In response to EEI’s comment that it assumes that the Commission does 

not mean to prohibit the sharing of senior executives responsible for overseeing overall 

corporate family activities, we reiterate that a franchised public utility with captive 

customers and its market-regulated power sales affiliates are permitted to share “senior 

officers and members of the board of directors provided that these individuals do not 

 

waiver was necessary to allow for the practical and efficient operation of the conjoined 

facilities); Allegheny Energy Inc., 119 FERC ¶ 61,025 at P 20 (granting waiver of the 

market-based rate code of conduct information sharing provision (the market-based 

rate code of conduct was the predecessor to the affiliate restrictions codified in Order 

No. 697) based on the applicants’ representations that the waiver was necessary to allow 

for the practical and efficient operation of the conjoined facilities). 

46 For example, accounting, engineering, environmental, finance, legal, operations, 

maintenance, permitting, real estate, safety, and siting functions, so long as the 

employees do not make “economic decisions related to generation plant acquisitions.” 

EEI Request for Rehearing at 9. 

47 Order No. 697, FERC Stats. & Regs. ¶ 31,252 at P 564. 

48 Id. P 565; Order No. 697-A, FERC Stats. & Regs. ¶ 31,268 at P 251-253. 

49 Order No. 697-A, FERC Stats. & Regs. ¶ 31,268 at P 251. 

50 Id. P 564; see also 18 C.F.R. § 35.39(g) (2010). 
Docket No. RM04-7-009 - 13 - 

participate in directing, operating or executing generation or market functions.”51 

Permissibly shared senior officers and directors may not act as a conduit to provide 

market information to non-shared employees of the franchised public utility with captive 

customers or its market-regulated power sales affiliates.52

23. We deny EEI’s request that that the Commission clarify on a generic basis that 

franchised public utilities with captive customers and their market-regulated power sales 

affiliates that currently rely on a shared fuel procurement unit may continue to do so, so 

long as the Commission or a state commission has approved the sharing of such 

employees or such sharing is consistent with no-action letters or other such guidance. 

While the Commission has granted waiver of its market-based rate affiliate restrictions to 

permit the sharing of certain employees in certain circumstances, these waivers were 

based on case-specific circumstances and representations made by the specific applicants 

in those cases.53 We believe that the Commission, for purposes of the affiliate 

restrictions, should retain its authority to review on a case-by-case basis circumstances 

where affiliates seek to share employees or market information. 

24. Accordingly, we emphasize that prior orders granting waiver and staff-issued no 

action letters permitting sharing of employees are case specific and apply only to the 

entities that were granted waiver in those cases. Thus, franchised public utilities with 

captive customers and their market-regulated power sales affiliates may only share fuel 

procurement employees, or any other employee that is prohibited from being shared 

under the market-based rate affiliate restrictions, if they have obtained a case-specific 

waiver from the Commission or case specific no-action letter from Commission staff that 

permits them to share such employees, and is based on the specific circumstances and 

representations made by the applicants for the waiver or no-action letter. Entities that 

have previously obtained waiver of certain of the affiliate restrictions may continue to 

 51 Id. P 562; see, e.g., American Electric Power Service Corp., 119 FERC 

¶ 61,064, at P 20 (2007) (granting waiver of the market-based rate code of conduct (the 

market-based rate code of conduct was the predecessor to the affiliate restrictions 

codified in Order No. 697) to allow sharing of a senior executive officer based on the 

applicants’ representations that the senior executive officer was not involved in the daily 

functions of directing, organizing and executing business decisions). 

52 Id.; 18 C.F.R. § 35.39(g) (2010). 

53 In Cleco Power LLC, for example, the waiver of certain affiliate restrictions was 

limited to three employees, was limited to the “specific facts and circumstances” 

presented by the applicants, and was conditioned on the requirement that the applicants 

maintain sufficient records to allow the Commission to audit their compliance with the 

conditions of the waiver. 130 FERC ¶ 61,102, at P 22-25. 
Docket No. RM04-7-009 - 14 - 

rely on those waivers as long as the facts and circumstances relied on by the Commission 

in granting the waiver remain true and accurate, and as long as any conditions set forth in 

the order granting the waiver continue to be satisfied.54 While we are denying EEI’s 

request to permit the sharing of fuel procurement employees when a state commission 

has approved the sharing of such employees, to the extent an affected entity believes that 

a state commission’s determination supports waiver of the prohibition against sharing 

fuel procurement employees, the Commission will consider such an argument if it is 

presented in a case-specific request for waiver or request for a no-action letter. 

25. We find that EEI’s arguments that the Commission predetermined the outcome of 

the NOPR proceeding by issuing the April 15 Clarification Order on the same day as the 

NOPR are rendered moot by our decision to withdraw the NOPR in an order issued 

concurrently with this order.55 

26. We will deny EEI’s request that the Commission stay or rescind the April 15 

Clarification Order. Although the NOPR may have created some confusion regarding 

compliance with the currently-effective market-based rate regulations, it was not intended 

to expand the existing market-based rate affiliate restrictions as codified in the 

regulations, but rather was intended to provide guidance to the industry as to how the 

Commission interprets and applies its existing market-based rate affiliate restriction 

regulations. As noted above, the Commission granted EEI’s request for an extension of 

time to comply with the guidance provided in the April 15 Clarification Order regarding 

employees that engage in fuel procurement or resource planning until such time as the 

Commission issues a final rule in the NOPR proceeding. Thus, public utilities are not 

currently subject to enforcement with respect to the sharing of employees that engage in 

fuel procurement or resource planning. In this regard, stay or rescission of the April 15 

Clarification Order is unnecessary. 

27. Further, as discussed above, the Commission declined to grant an extension of 

time to comply with the requirement that a franchised public utility with captive 

customers may not share outage and economic dispatch personnel with its marketregulated power sales affiliate because the Commission had previously explained that the 

 54 See Interpretative Order Modifying No-Action Letter Process and Reviewing 

Other Mechanisms for Obtaining Guidance, 123 FERC ¶ 61,157, at P 10-12 (2008) 

(explaining that no-action letters “can offer useful guidance to the industry,” however, are 

non-binding on the Commission, and must relate to a specific, actual transaction, practice 

or situation in which the applicant is or may be involved, and that the applicant must 

explain the specific details of the transaction, practice or situation). 

55 Market-Based Rate Affiliate Restrictions, 134 FERC ¶ 61,047 (2011). 
Docket No. RM04-7-009 - 15 - 

sharing of such employees was not permitted absent case-specific waiver.56 Thus, stay or 

rescission of this aspect of the April 15 Order is unwarranted. 

28. While we are issuing an order withdrawing the NOPR concurrently with this 

order, as explained in that order and herein,57 the existing regulations already require that 

“to the maximum extent practical, the employees of a market-regulated power sales 

affiliate must operate separately from the employees of any affiliated franchised public 

utility.” We therefore affirm the guidance provided by the Commission in the April 15 

Clarification Order that franchised public utilities with captive customers may not share 

employees that determine the timing of scheduled outages, or that engage in economic 

dispatch, fuel procurement, or resource planning with their market regulated power sales 

affiliates.58 Accordingly, sellers will be required to comply with the guidance provided 

in the April 15 Clarification Order within 90 days of the date of issuance of this order. 

The Commission orders: 

 (A) EEI’s request for stay or rescission of the April 15 Clarification Order is 

hereby denied, and its request for rehearing is hereby denied, as discussed in the body of 

this order. 

(B) Sellers are hereby required to comply with the guidance provided in the 

April 15 Clarification Order within 90 days of the date of issuance of this order. 

By the Commission. 

( S E A L ) 

Kimberly D. Bose, 

Secretary. 

 56 April 15 Clarification Order, 131 FERC ¶ 61,021 at P 37, 40 (citing Order 

No. 697-A, FERC Stats. & Regs. ¶ 31,268 at P 253). 

57 See supra P 20. 

58 See also April 15 Clarification Order, 131 FERC ¶ 61,021 at P 37, 40-41 (citing 

Order No. 697-A, FERC Stats. & Regs. ¶ 31,268 at P 253).