Document ID: FERC-2022-1016-0001
Agency: ferc
Document Type: Proposed Rule
Title: Credit-Related Information Sharing in Organized Wholesale Electric Markets
Posted Date: 2022-08-08T04:00Z

[Federal Register Volume 87, Number 151 (Monday, August 8, 2022)]
[Proposed Rules]
[Pages 48118-48125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-16609]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM22-13-000]

Credit-Related Information Sharing in Organized Wholesale 
Electric Markets

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
proposing, pursuant to section 206 of the Federal Power Act, to amend 
its regulations to permit credit-related information sharing in 
organized wholesale electric markets to ensure that credit practices in 
those markets result in jurisdictional rates that are just and 
reasonable. The Commission seeks public comment on the proposed 
regulations.

DATES: Comments are due October 7, 2022. Reply comments are due 
November 7, 2022.

ADDRESSES: Comments, identified by docket number, may be filed in the 
following ways. Electronic filing through http://www.ferc.gov, is 
preferred.
     Electronic Filing: Documents must be filed in acceptable 
native applications and print-to-PDF, but not in scanned or picture 
format.
     For those unable to file electronically, comments may be 
filed by USPS mail or by hand (including courier) delivery.
    [cir] Mail via U.S. Postal Service Only: Addressed to: Federal 
Energy Regulatory Commission, Secretary of the Commission, 888 First 
Street NE, Washington, DC 20426.
    [cir] Hand (including courier) Delivery: Deliver to: Federal Energy 
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.
    The Comment Procedures Section of this document contains more 
detailed filing procedures.

FOR FURTHER INFORMATION CONTACT: 
David Bowers (Technical Information), Office of Energy Policy and 
Innovation, 888 First Street NE, Washington, DC 20426, 202-502-8594, 
[email protected]
Patrick Metz (Legal Information), Office of the General Counsel, 888 
First Street NE, Washington, DC 20426, 202-502-8197, 
[email protected]

SUPPLEMENTARY INFORMATION:

I. Introduction

    1. Pursuant to section 206 of the Federal Power Act (FPA),\1\ the 
Commission is proposing to revise Sec.  35.47 of title 18 of the Code 
of Federal Regulations to permit regional transmission organizations 
(RTO) and independent system operators (ISOs) to share among themselves 
credit-related information regarding market participants in organized 
wholesale electric markets.\2\ The ability of RTOs/ISOs to share 
credit-related information among themselves could improve their ability 
to accurately assess market participants' credit exposure and risks 
related to their activities across organized wholesale electric 
markets. The ability to share such information could also enable RTOs/
ISOs to respond to credit events more quickly and effectively, 
minimizing the overall credit-related risks of unexpected defaults by 
market participants in organized wholesale electric markets.
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    \1\ 16 U.S.C. 824e.
    \2\ See Credit Reforms in Organized Wholesale Elec. Mkts., Order 
No. 741, 75 FR 65942 (Oct. 21, 2010), 133 FERC ] 61,060, at P 1 n.1 
(2010) (``[O]rganized wholesale electric markets include energy, 
transmission and ancillary service markets operated by independent 
system operators . . . and regional transmission organizations'' 
which are ``responsible for administering electric energy and 
financial transmission rights markets.''), order on reh'g, Order No. 
741-A, 134 FERC ] 61,126, reh'g denied, Order No. 741-B, 135 FERC ] 
61,242 (2011).
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    2. To ensure that RTOs'/ISOs' credit policies remain just and 
reasonable, the Commission proposes to revise its regulations to 
require each RTO/ISO to adopt tariff provisions that permit the sharing 
of its market participants' credit-related information with other RTOs/
ISOs to enhance credit risk

[[Page 48119]]

assessment efforts. The Commission seeks public comment on this 
proposed reform.

II. Background

A. Previous Commission Action

    3. Credit policies of regulated utilities have long been a 
component of the Commission's regulatory agenda. For example, when the 
Commission issued its pro forma Open Access Transmission Tariff (OATT) 
in Order No. 888, the Commission required each transmission provider's 
tariff to include reasonable creditworthiness standards.\3\ The 
Commission did not prescribe specific credit standards and processes, 
however, and thus left substantial discretion to transmission providers 
in assessing and managing credit risks.
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    \3\ Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Servs. by Pub. Utils.; Recovery of 
Stranded Costs by Pub. Utils. & Transmitting Utils., Order No. 888, 
61 FR 21540 (May 10, 1996), FERC Stats. & Regs. ] 31,036, at 31,937 
(1996) (cross-referenced at 75 FERC ] 61,080) (setting forth section 
11 (Creditworthiness) of the pro forma OATT), order on reh'g, Order 
No. 888-A, 62 FR 12274 (Mar. 14, 1997), FERC Stats. & Regs. ] 31,048 
(cross-referenced at 78 FERC ] 61,220), order on reh'g, Order No. 
888-B, 81 FERC ] 61,248 (1997), order on reh'g, Order No. 888-C, 82 
FERC ] 61,046 (1998), aff'd in relevant part sub nom. Transmission 
Access Pol'y Study Grp. v. FERC, 225 F.3d 667 (D.C. Cir. 2000), 
aff'd sub nom. N. Y. v. FERC, 535 U.S. 1 (2002).
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    4. In light of major distress in financial markets during the 2008 
financial crisis, the Commission explored the role of credit in the 
organized wholesale electric markets and the potential for policy 
reforms to strengthen credit practices and mitigate credit-related 
risks.\4\ Subsequently, the Commission issued Order No. 741, which 
promulgated regulations establishing minimum standards for several 
aspects of credit policy in organized wholesale electric markets, 
collectively aimed at reducing mutualized default risk, i.e., the risk 
that a default by one market participant is unsupported by collateral 
and therefore must be socialized among all market participants.\5\ As 
the Commission explained, risk management and creditworthiness 
practices are important to the organized wholesale electric markets 
because of this mutualized default risk.\6\
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    \4\ Credit Reforms in Organized Wholesale Electric Mkts., Notice 
of Proposed Rulemaking, 75 FR 4310 (Jan. 27, 2010), FERC Stats. & 
Regs. ] 32,651 (2010).
    \5\ Order No. 741, 133 FERC ] 61,060 at PP 4, 12; see also 18 
CFR 35.47 (setting forth tariff provisions related to credit 
practices in organized wholesale electric markets).
    \6\ Order No. 741, 133 FERC ] 61,060 at P 7.
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B. Current Practices

    5. RTOs/ISOs assess a market participant's financial condition 
using credit-related information provided by market participants and 
prospective market participants. RTOs/ISOs generally receive this 
credit-related information at specified intervals or upon specific 
milestone events, including from: (1) interconnection customers during 
the generator interconnection process; \7\ (2) prospective market 
participants during the assessment of applications for market 
participant status; \8\ (3) market participants during annual or 
periodic credit reviews; \9\ and (4) market participants in response to 
periodic requests by RTO/ISO credit departments.\10\
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    \7\ See, e.g., PJM, Intra-PJM Tariffs, OATT, section 222 (0.0.0) 
(requiring PJM to keep confidential any information provided by 
interconnection customers).
    \8\ See, e.g., SPP Open Access Transmission Tariff, Sixth 
Revised Volume No. 1, attach. AE, section 3.7 (0.0.0) (requiring SPP 
to validate that prospective market participants meet SPP's credit 
requirements).
    \9\ See, e.g., NYISO MST, 26.1 MST attach. K (Minimum 
Participation Criteria) (4.0.0), section 26.1.2 (requiring customers 
to demonstrate ongoing compliance with the minimum participation 
requirements in section 26.1.1).
    \10\ PJM, Intra-PJM Tariffs, OATT, attach. Q (45.0.0), section 
II.E (requiring market participants to provide information on an 
ongoing basis).
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    6. Market participants and prospective market participants 
generally do not make the credit-related information they provide to 
RTOs/ISOs publicly available, and RTOs/ISOs treat market participants' 
credit-related information as confidential information subject to 
tariff provisions that limit the use of this information to specific 
purposes and limit the ability of RTOs/ISOs to share this information 
with other parties.\11\
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    \11\ See, e.g., ISO-NE, Transmission, Markets, and Services 
Tariff, attach. D (ISO-NE Information Policy) (22.0.0), section 2.0 
(requiring ISO-NE entities to use Confidential Information ``solely 
to perform their obligations under the NEPOOL Agreement and the 
Participants Agreement'').
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    7. Generally, in each Commission-jurisdictional organized wholesale 
electric market, if a market participant defaults and its collateral is 
insufficient to cover the amount of its outstanding obligations, the 
remaining cost of those obligations is spread across the organized 
wholesale electric market's market participants (i.e., the default is 
``mutualized'').\12\ An RTO's/ISO's ability to reduce mutualized 
default risk can help to prevent defaults and minimize the costs 
resulting from such defaults.
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    \12\ See, e.g., PJM, Intra-PJM Tariffs, OA, section 15.2.2 
(7.0.0); SPP, Open Access Transmission Tariff, Sixth Revised Volume 
No. 1, attach. L, section V (1.0.0).
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C. Technical Conference

    8. In 2019, Energy Trading Institute (ETI) submitted a petition 
requesting that the Commission convene a technical conference and 
consider a potential rulemaking to improve RTO/ISO credit 
practices.\13\ In response to ETI's petition, the Commission received 
comments suggesting that the industry would benefit from a discussion 
about best practices and the differences among RTO/ISO credit 
policies.\14\
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    \13\ Energy Trading Institute Request for Technical Conference 
and Petition for Rulemaking to Update Credit and Risk Management 
Rules and Procedures in the Organized Markets, Credit Reforms in 
Organized Wholesale Electric Markets, Docket No. AD20-6-000 (Dec. 
16, 2019).
    \14\ Comments of the Indicated PJM Transmission Owners at 1-2, 
4; Comments of Edison Electric Institute at 3-4; Comments of 
International Energy Credit Association at 9-10; Notice of Request 
for Technical Conference and Petition for Rulemaking, Docket No. 
AD20-6-000 (Feb. 11, 2020).
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    9. On February 25 and 26, 2021, Commission staff convened a 
technical conference to discuss principles and best practices for 
credit risk management in organized wholesale electric markets. 
Panelists at the technical conference included credit risk experts, 
market participants with experience in RTO/ISO credit policy 
compliance, and RTO/ISO risk officers. Among other topics, the 
technical conference addressed whether RTOs/ISOs could share market 
participants' credit-related information with one another, whether 
market participants had expressed concern about RTOs/ISOs sharing such 
information, whether there were rules or other barriers that prevented 
RTOs/ISOs from sharing such information, and how the Commission could 
address concerns regarding the confidential treatment of such 
information.\15\
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    \15\ See Supplemental Notice of Technical Conference, RTO/ISO 
Credit Principles and Practices, Docket No. AD21-6-000, et al. (Feb. 
10, 2021).
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    10. Panelists at the technical conference stated that there could 
be risk management benefits from sharing market participants' credit-
related information among RTO/ISO credit departments.\16\ For example, 
one panelist explained that it would be helpful for an RTO/ISO credit

[[Page 48120]]

department to know that a market participant is experiencing financial 
distress in another organized wholesale electric market in which it 
transacts because the RTO/ISO credit department could then focus its 
attention on whether the market participant's financial distress in 
another market could impact its own markets.\17\
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    \16\ See RTO/ISO Credit Principles and Practices, Technical 
Conference, Docket No. AD21-6-000, et al., Tr. 100:24-102:20, 106:1-
24 (Bloczynski) (Feb. 25, 2021); id. at Tr. 102:25-104:5 (Brown); 
id. at Tr. 104:7-105:9 (Prevratil); id. at Tr. 105:12-24 (Seghesio). 
Further, one panelist stated that credit-related information sharing 
would bring additional transparency to organized wholesale electric 
markets, which would build confidence in those markets to the 
benefit of market participants and consumers. See id. at Tr. 30:15-
23, 58:1-9 (Heinle).
    \17\ Id. at Tr. 104:21-105:6 (Prevratil).
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    11. In its post-technical conference comments, the ISO/RTO Council 
(IRC) \18\ stated that credit-related information sharing among RTOs/
ISOs would improve the RTOs'/ISOs' ability to anticipate and respond to 
credit risks or prevent the occurrence of negative credit events.\19\ 
The IRC explained that the primary obstacles to RTOs/ISOs sharing 
credit-related information are: (1) the confidentiality provisions 
included in RTO/ISO OATTs; and (2) the lack of specific Commission 
authorization or policy favoring credit-related information sharing 
among RTOs/ISOs.\20\
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    \18\ The IRC is composed of Commission-jurisdictional RTOs/ISOs, 
including PJM Interconnection, L.L.C. (PJM), ISO New England Inc. 
(ISO-NE), California Independent System Operator Corporation 
(CAISO), New York Independent System Operator, Inc. (NYISO), 
Midcontinent Independent System Operator, Inc. (MISO), and Southwest 
Power Pool, Inc. (SPP), as well as three transmission system 
operators that are not Commission-jurisdictional, including Electric 
Reliability Council of Texas, Inc. (ERCOT), the Alberta Electric 
System Operator (AESO), and the Independent Electricity System 
Operator (IESO).
    \19\ Comments of the ISO/RTO Council, RTO/ISO Credit Principles 
and Practices, Docket No. AD21-6-000, et al., at 2, 5-6 (filed June 
7, 2021) (IRC Comments).
    \20\ Id. at 5.
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    12. The IRC therefore recommended that the Commission require RTOs/
ISOs to adopt tariff revisions permitting RTOs/ISOs to share credit-
related information with other RTOs/ISOs. The IRC recommended that the 
Commission afford RTOs/ISOs the flexibility to manage and mitigate 
credit risks, and to allow each RTO/ISO to take any action permitted 
under its OATT that the RTO/ISO deems necessary in response to the 
receipt of credit-related information.\21\ The IRC further explained 
that each RTO/ISO that receives credit-related information from another 
RTO/ISO should be required to protect that information in accordance 
with the receiving RTO's/ISO's existing confidentiality provisions.\22\ 
The IRC also recommended that the Commission state explicitly that 
RTOs/ISOs need not obtain consent of market participants before sharing 
credit-related information, and argued that market participants would 
be on notice that RTOs/ISOs may share their credit-related information 
by virtue of language included in the RTOs'/ISOs' OATTs.\23\
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    \21\ Id. at 7-8.
    \22\ Id. at 3.
    \23\ Id. at 7.
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    13. The IRC argued that sharing market participants' credit-related 
information would be most effective with uniform rules across all of 
the RTOs/ISOs.\24\ The IRC provided the following tariff language that 
each RTO/ISO could include in its OATT in order to implement IRC's 
credit-related information sharing approach:
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    \24\ Id.

    [Transmission Provider] is permitted to share [Market 
Participant and Applicant] credit information with and receive 
[Market Participant and Applicant] credit information from other 
Commission-authorized Regional Transmission Organizations and 
Independent System Operators, for the purpose of credit risk 
management and mitigation, provided those entities agree to treat 
[Market Participant and Applicant] information as confidential under 
the terms for confidential treatment of [Market Participant and 
Applicant] information under their own tariffs or other governing 
documents. [Transmission Provider] is permitted to use [Market 
Participant and Applicant] information received from the entities 
listed above to the same extent it may use similar information from 
other [Market Participants and Applicants] under the terms of this 
Tariff.\25\
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    \25\ Id. at 6. IRC also proposed language related to sharing 
market participants' credit-related information with ERCOT, AESO, 
and IESO that is omitted here.
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III. Need for Reform

    14. We preliminarily find that it is unjust and unreasonable for 
RTOs/ISOs to be unable to share with each other credit-related 
information about their market participants. Further, we preliminarily 
find that tariff provisions that prohibit or otherwise limit an RTO/ISO 
from sharing credit-related information are unjust and unreasonable. 
Tariff provisions that prohibit or limit sharing of credit-related 
information can hinder an RTO's/ISO's ability to evaluate a market 
participant's creditworthiness and respond to credit events, and, thus, 
in turn, can hinder its ability to prevent or mitigate default by 
market participants. Because the costs of such defaults are typically 
borne by non-defaulting market participants, an RTO's/ISO's lack of 
access to credit-related information may lead to unjust and 
unreasonable rates for its market participants.
    15. As the entities responsible for administering the organized 
wholesale electric markets, RTOs/ISOs are responsible for credit risk 
management. RTOs/ISOs perform this responsibility in the organized 
wholesale electric markets by instituting, maintaining, and enforcing 
policies that balance the need for robust market participation and 
liquidity while seeking to minimize mutualized default risk.
    16. We believe that, in order to manage credit risk in the 
organized wholesale electric markets, RTOs/ISOs must have adequate 
information on their market participants' financial standing and on 
their business and operational activities, including credit-related 
information on their activities in other organized wholesale electric 
markets. This information allows for a more effective assessment of 
those market participants' default risk. Currently, however, each RTO/
ISO only has access to publicly available information and to the 
credit-related information provided by its own market participants. 
Each RTO/ISO thus may have limited visibility, if any, into their 
market participants' activities in other organized wholesale electric 
markets.
    17. Market participants increasingly operate in multiple organized 
wholesale electric markets, whether directly or through affiliated 
entities, and their trading activities have become more complex and 
sophisticated.\26\ These developments have complicated the ability of 
an individual RTO/ISO credit department to develop a complete, 
accurate, and up-to-date picture of a market participant's current 
financial condition due to real or perceived barriers to information 
sharing among RTOs/ISOs.\27\
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    \26\ See RTO/ISO Credit Principles and Practices, Technical 
Conference, Docket No. AD21-6-000, et al., Tr. 30:12-14 (Heinle) 
(Feb. 25, 2021).
    \27\ IRC Comments at 2.
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    18. Negative credit events affecting a market participant's credit 
standing in one market may impact its credit standing in other 
markets.\28\ An RTO/ISO that cannot obtain market participants' credit-
related information arising from their activities in other organized 
wholesale electric markets may not be able to fully protect its 
organized wholesale electric market from mutualized default risk. 
Therefore, in order to ensure just and reasonable rates in the 
organized wholesale electric markets by minimizing mutualized default 
risk, we propose to permit each RTO/ISO to share with other RTOs/ISOs 
market participants' credit-related information.
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    \28\ Order No. 741, 133 FERC ] 61,060 at P 3; see also RTO/ISO 
Credit Principles and Practices, Technical Conference, Docket No. 
AD21-6-000, et al., Tr. 44:15-23 (Wasserman) (Feb. 25, 2021); id. at 
Tr. 105:1-6 (Prevratil).

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[[Page 48121]]

    19. Currently, RTO/ISO OATTs generally contain provisions that 
treat a market participant's credit-related information as confidential 
information and, in most instances, prohibit an RTO/ISO from sharing 
that credit-related information with other RTOs/ISOs without the 
consent of the market participant.\29\ Effectively, such tariff 
provisions allow a market participant to limit the amount and quality 
of information that an RTO/ISO may access and use to assess that market 
participant's financial standing, and these provisions therefore may 
pose an unreasonable barrier to credit risk management and mitigation 
by the RTOs/ISOs.\30\
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    \29\ See, e.g., ISO-NE, Transmission, Markets, and Services 
Tariff, attach. D (ISO-NE Information Policy) (22.0.0), section 
2.1(e) (designating information disclosed by a market participant to 
satisfy ISO-NE minimum criteria for market participation as 
Confidential Information in certain circumstances); PJM, Intra-PJM 
Tariffs, OATT, attach. Q (45.0.0), section III.C (same).
    \30\ At the technical conference, MISO's Chief Financial Officer 
stated that the MISO OATT prohibits the disclosure of a MISO market 
participant's financial distress even if that market participant is 
on the verge of default. See RTO/ISO Credit Principles and 
Practices, Technical Conference, Docket No. AD21-6-000, et al., Tr. 
116:6-10 (Brown) (Feb. 25, 2021).
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    20. To minimize the costs of mutualized defaults and ensure just 
and reasonable rates, we preliminarily find that tariff provisions that 
limit sharing credit-related information among other RTOs/ISOs limits 
the ability of an RTO/ISO to perform accurate credit assessments to 
limit the likelihood of defaults in its marketplace and to mitigate 
such defaults. Limits on sharing this information may cause unnecessary 
costs to be incurred by non-defaulting market participants resulting in 
rates that are unjust and unreasonable. Given the role RTOs/ISOs play 
in protecting organized wholesale electric markets from the risks of 
mutualized default, we preliminarily find that these tariff provisions 
are unjust or unreasonable.

IV. Proposal

    21. To address RTOs'/ISOs' access to credit-related information, we 
propose to amend the Commission's regulations to require RTOs/ISOs to 
include in their OATTs provisions that permit them to share market 
participants' credit-related information with other RTOs/ISOs for the 
purpose of credit risk management and mitigation. We also propose to 
permit the receiving RTO/ISO to use market participant credit-related 
information received from another RTO/ISO to the same extent and for 
the same purposes that the receiving RTO/ISO may use credit-related 
information collected from its own market participants.
    22. These tariff provisions would allow RTOs/ISOs to share a range 
of credit-related information, such as the following: (1) lists of 
market participants with positions in that market; (2) reports and 
metrics around risk and credit exposures; (3) disclosure that a market 
participant or affiliate has defaulted on any of its financial or 
contractual obligations, failed to pay invoices on a timely basis, or 
failed to meet a collateral call; (4) information regarding a market 
participant's or its affiliate's unresolved credit/collateral issues; 
(5) information indicating that a market participant or its affiliate 
has an increased risk of default, such as instances where a market 
participant or its affiliate has experienced a material adverse 
condition or material adverse change under an RTO/ISO OATT or related 
agreement; and (6) any other information on a market participant or its 
affiliate that indicates a possible material adverse change in 
creditworthiness or financial status or an unreasonable credit risk. We 
seek comment on what restrictions, if any, there should be on the types 
of credit-related information that may be shared between RTOs/ISOs.
    23. We also preliminarily find that an RTO's/ISO's sharing of a 
market participant's credit-related information with another RTO/ISO 
must not be conditioned on the consent of the market participant. As 
discussed above, current tariff provisions implicitly impose this 
barrier to credit-related information sharing, and we believe that this 
barrier is unjust and unreasonable. As IRC argues, a market participant 
facing financial difficulty would have little incentive to consent to 
credit-related information sharing.\31\ Under our proposal, RTOs/ISOs 
would not be required to notify market participants before sharing 
credit-related information with another RTO/ISO. Instead, under our 
proposal, the RTOs'/ISOs' OATTs as revised would provide notice that 
credit-related information could be shared on a confidential basis with 
other RTOs/ISOs for the purpose of credit risk management and 
mitigation. We agree with IRC that permitting RTOs/ISOs to share 
credit-related information without their having to obtain a market 
participant's consent or to provide notice would facilitate expeditious 
information sharing and would thus allow for improved risk 
mitigation.\32\
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    \31\ IRC Comments at 7.
    \32\ Id.
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    24. To properly manage credit risk, reduce the likelihood of credit 
defaults, protect non-defaulting market participants, and minimize 
mutualized default risk, RTOs/ISOs currently (1) monitor and analyze 
credit-related information on an ongoing basis, and (2) use available 
credit-related information to respond effectively to negative credit 
events. We believe that the reform proposed herein would allow RTOs/
ISOs to gain additional visibility into their market participants' 
financial condition and to administer organized wholesale electric 
markets more effectively both as part of ongoing ``business-as-usual'' 
credit risk management practices and during market or credit events.
    25. The RTO/ISO credit departments regularly meet with each other 
to discuss policies that could reduce credit risks, but they currently 
do not disclose or discuss issues related to the activities of specific 
market participants that operate in multiple organized wholesale 
electric markets.\33\ Technical conference panelists stated that an 
RTO/ISO may benefit simply from the ability to request that another 
RTO/ISO verify that a market participant has participated appropriately 
in another organized wholesale electric market.\34\ We preliminarily 
find that RTOs/ISOs would benefit from the ability to discuss the 
creditworthiness of specific market participants, and permitting RTOs/
ISOs to share credit-related information with other RTOs/ISOs will 
allow these discussions to take place and better inform RTOs/ISOs in 
the management of credit risk in the organized wholesale electric 
markets on an ongoing basis.
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    \33\ RTO/ISO Credit Principles and Practices, Technical 
Conference, Docket No. AD21-6-000, et al., Tr. 106:3-24 (Bloczynski) 
(Feb. 25, 2021).
    \34\ Id. at Tr. 110:12-22 (Prevratil); id. at Tr. 111:19-23 
(Bloczynski).
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    26. Further, we believe that credit-related information sharing 
would prove especially useful before, during, and after a credit 
event.\35\ The sharing of market participant-specific credit-related 
information could help RTOs/ISOs prevent or mitigate losses in the 
event that a market participant experiences financial distress, and 
potentially prevent default in one organized wholesale electric market 
from triggering default in another.\36\ Credit-related information 
sharing would give RTOs/ISOs better visibility into a market 
participant's credit standing in other organized wholesale electric 
markets. This visibility could

[[Page 48122]]

allow RTOs/ISOs to take action to protect non-defaulting market 
participants in their own markets from costs associated with potential 
and actual defaults, such as restricting market activity in response to 
negative credit events in other markets.
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    \35\ See id. at Tr. 117:5-13 (Brown) (emphasizing the potential 
value in sharing credit-related information during credit events).
    \36\ Id. at Tr. 106:21-24 (Bloczynski).
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    27. Because credit events can develop rapidly \37\ and we cannot 
anticipate every potential credit event \38\ or factor that may call 
for the sharing of credit-related information, we propose to provide 
each RTO/ISO with the discretion to share credit-related information as 
it sees fit. An RTO/ISO would have discretion as to what credit-related 
information it chooses to provide to other RTOs/ISOs and under what 
circumstances and on what timeline it chooses to do so. However, we 
expect that RTOs/ISOs would use reasonable efforts to respond 
expeditiously to reasonable requests for credit-related information 
from other RTOs/ISOs. We seek comment on whether RTOs'/ISOs' discretion 
in sharing market participant credit-related information with each 
other should be limited in any specific ways or to any specific 
circumstances.
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    \37\ Id. at Tr. 105:14-16 (Seghesio).
    \38\ For purposes of this notice of proposed rulemaking (NOPR), 
``credit event'' means any type of event that could affect a market 
participants' credit standing.
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    28. The proposal would not change the existing discretion an RTO/
ISO has to act on credit-related information, regardless of the source 
of that information. This approach is consistent with the Commission's 
past precedent to provide RTOs/ISOs discretion in matters of 
creditworthiness.\39\ The discretion provided to RTOs/ISOs in managing 
negative credit events is not unfettered, and the regulation we propose 
would clarify that the receiving RTO/ISO can use market participant 
credit-related information received from another RTO/ISO to the same 
extent and for the same purposes that the receiving RTO/ISO may use 
credit-related information collected from its own market participants. 
We seek comment on whether RTOs'/ISOs' discretion in acting on market 
participant credit-related information it receives from another RTO/ISO 
be limited in any specific ways or under any specific circumstances.
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    \39\ See, e.g., N.Y. Indep. Sys. Operator, Inc., 170 FERC ] 
61,054, at P 30 (2020) (``We agree with NYISO that the proposed 
tariff language will allow NYISO the reasonable discretion to 
evaluate individual facts and circumstances, as necessary, to 
protect the NYISO-administered markets without limiting NYISO to act 
only in specific scenarios of increased credit risk enumerated in 
the tariff'').
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    29. Further our proposed regulation would require that an RTO/ISO 
that receives credit-related information from another RTO/ISO keep 
confidential that credit-related information as it would any other 
credit-related information received directly from one of its own market 
participants. We preliminarily find that this would ensure that all 
market participants' credit-related information would continue to be 
safeguarded by an RTO/ISO in accordance with the confidentiality 
protections of the receiving RTO's/ISO's OATT.
    30. At the technical conference, panelists expressed concerns about 
the confidentiality protections of shared credit-related 
information.\40\ Additionally, a commenter expressed concern about 
using market-related events as the triggering factor for information 
sharing as it could exacerbate the event by burdening the market 
participants and RTO/ISO staff.\41\ To address such concerns, we seek 
comment on any additional restrictions that should be placed on RTOs/
ISOs in their management and use of credit-related information obtained 
through sharing or the types of credit-related information that could 
be shared.
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    \40\ See RTO/ISO Credit Principles and Practices, Technical 
Conference, Docket No. AD21-6-000, et al., Tr. 103:7-12 (Brown) 
(Feb. 25, 2021).
    \41\ ETI Comments at 13 (``If extreme events are the only 
trigger, the Commission risks burdening market participants and RTO/
ISO staff as they manage through those events as well as making the 
extreme events worse by taking actions that exacerbate the event, 
such as demanding additional collateral that would halt beneficial 
market activity.'').
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    31. We clarify that we are not proposing that RTOs/ISOs be required 
to adopt IRC's proposed tariff language. Instead, we propose that each 
RTO/ISO would submit a compliance filing that would be consistent with 
a final rule in this proceeding. In that filing, the RTO/ISO would 
propose revisions to their OATTs or other governing documents that 
would permit credit-related information sharing as provided in the 
final rule. We also seek comment on whether 60 days after the effective 
date of any final rule is sufficient time to develop new tariff 
language in response to a potential final rule on credit-related 
information sharing.
    32. We clarify that our proposal here would permit but not require 
RTOs/ISOs to share credit-related information with other RTOs/ISOs. As 
discussed above, an RTO/ISO would retain the discretion on whether to 
share credit-related information. This approach addresses the problem 
identified at the technical conference and in post-conference comments: 
that RTOs/ISOs may be constrained by the confidentiality provisions of 
each RTO's/ISO's OATT from sharing credit-related information with each 
other. By relying on the discretion of RTOs/ISOs, this proposal would 
allow RTO/ISO credit departments to share credit-related information 
without the potential burden of reporting requirements.
    33. While we believe the structure proposed herein is a just and 
reasonable approach, we acknowledge the potential benefits of adopting 
requirements that RTOs/ISOs share credit-related information with other 
RTOs/ISOs. Adopting requirements that RTOs/ISOs share credit-related 
information with other RTOs/ISOs could potentially ensure a baseline 
sharing of credit-related information, which may reduce the financial 
losses to non-defaulting market participants during credit events. In 
particular, RTOs/ISOs may be able to mitigate or even prevent credit 
events if they obtain more complete credit-related information about 
market participants prior to any credit event, and mandatory credit-
related information sharing could increase the likelihood that RTOs/
ISOs have that more complete information available. Accordingly, we 
seek comment on whether the Commission should adopt requirements that 
RTOs/ISOs share credit-related information with other RTOs/ISOs on a 
routine basis (e.g., monthly sharing of a list of market participants), 
in certain circumstances (e.g., when a market participant misses a 
collateral call), or upon the request of another RTO/ISO, as well as 
any proposals on the frequency or timeliness of such sharing. We seek 
comment on the types or categories of credit-related information that 
might be included in any sharing requirement. In particular, we seek 
comment on whether and, if so, how to require sharing of the categories 
of information discussed above.\42\
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    \42\ See supra P 22.
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    34. While we recognize the potential benefits of requiring RTOs/
ISOs to share credit-related information, we also acknowledge the 
potential burdens that may accompany such an approach. For example, 
some rules could diminish the flexibility an RTO/ISO has to respond to 
a dynamic credit-related event. Other rules may require RTOs/ISOs to 
expend additional resources on credit risk management, which could 
raise costs or impose additional burdens on both RTOs/ISOs and market 
participants.\43\ Accordingly, we also seek comment on the benefits and 
burdens (if any) of any

[[Page 48123]]

potential requirements to share credit-related information on RTOs/ISOs 
and market participants.
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    \43\ See RTO/ISO Credit Principles and Practices, Technical 
Conference, Docket No. AD21-6-000, et al., Tr. 103:13-17 (Brown) 
(Feb. 25, 2021).
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    35. Finally, we note that the IRC requested that the Commission 
allow RTOs/ISOs to share credit-related information not only with other 
RTOs/ISOs, but also with other market operators, such as ERCOT, AESO, 
and IESO. We recognize that market participants in Commission-
jurisdictional organized wholesale electric markets also transact in 
markets that are not Commission-jurisdictional,\44\ and also 
commodities and derivative markets that are subject to the jurisdiction 
of other regulators, including the Commodity Futures Trading 
Commission.
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    \44\ For example, the default and bankruptcy of the Brazos 
Electric Power Cooperative in ERCOT after Winter Storm Uri resulted 
in claimed losses of $9,757,536 by MISO in February 2021. Brazos 
Elec. Power Coop. Inc., No. 4:21-BK-30725 (Bankr. S.D. Tex.).
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    36. We do not propose herein to require tariff provisions that 
would allow for credit-related information sharing with markets that 
are not Commission-jurisdictional, however, because we believe that 
there are unresolved issues with such a proposal, including how the 
Commission could ensure the protection of market participants' 
confidential information in the absence of authority to take remedial 
action. We seek comment on possible frameworks that would account for 
jurisdictional limitations while still enabling Commission-
jurisdictional RTOs/ISOs to share and receive credit-related 
information with and from other non-jurisdictional market operators.

V. Information Collection Statement

    37. The Office of Management and Budget's (OMB) regulations require 
approval of certain information collection requirements imposed by 
agency rules. Upon approval of a collection(s) of information, OMB will 
assign an OMB control number and an expiration date. Respondents 
subject to the filing requirements of a rule will not be penalized for 
failing to respond to these collections of information unless the 
collections of information display a valid OMB control number.
    38. This notice of proposed rulemaking proposes to amend the 
Commission's regulations pursuant to section 206 of the Federal Power 
Act, to permit RTOs/ISOs to share among themselves credit-related 
information about market participants in organized wholesale electric 
markets. To accomplish this, the Commission proposes to require RTOs/
ISOs to adopt tariff revisions reflecting this reform. Such filings 
would be made under Part 35 of the Commission's regulations.
    39. The Commission is submitting these reporting requirements to 
OMB for its review and approval under section 3507(d) of the Paperwork 
Reduction Act. Comments are solicited on whether the information will 
have practical utility, the accuracy of provided burden estimates, ways 
to enhance the quality, utility, and clarity of the information to be 
collected, and any suggested methods for minimizing the respondent's 
burden, including the use of automated information techniques.
    40. Please send comments concerning the collection of information 
and the associated burden estimates to: Office of Information and 
Regulatory Affairs, Office of Management and Budget, 725 17th Street 
NW, Washington, DC 20503, Attention: Desk Officer for the Federal 
Energy Regulatory Commission. Due to security concerns, comments should 
be sent electronically to the following email address: 
[email protected]. Comments submitted to OMB should refer to 
OMB Control No. 1902-[TBD].
    41. Please submit a copy of your comments on the information 
collection to the Commission via the eFiling link on the Commission's 
website at http://www.ferc.gov. If you are not able to file comments 
electronically, please send a copy of your comments to: Federal Energy 
Regulatory Commission, Secretary of the Commission, 888 First Street 
NE, Washington, DC 20426. Comments on the information collection that 
are sent to FERC should refer to Docket No. RM22-13-000.
    42. Title: Credit-Related Information Sharing in Organized 
Wholesale Electric Markets.
    43. Action: Proposed collection of information in accordance with 
RM22-13-000.
    44. OMB Control No.: 1902-[TBD].
    45. Respondents for this Rulemaking: RTOs/ISOs.
    46. Frequency of Information Collection: One-time compliance filing 
and ongoing information sharing (the latter information would not be 
submitted to the Commission).
    47. Necessity of Information: The proposed rule will require that 
RTOs/ISOs submit to the Commission a one-time compliance filing 
proposing tariff revisions. Additionally, RTOs/ISOs will be permitted 
to share credit related information among themselves to improve their 
ability to accurately assess market participants' credit exposure and 
risks related to their activities across organized wholesale electric 
markets.
    48. Internal Review: The Commission has reviewed the changes and 
has determined that such changes are necessary. These requirements 
conform to the Commission's need for efficient information collection, 
communication, and management within the energy industry in support of 
the Commission's ensuring just and reasonable rates. The Commission has 
specific, objective support for the burden estimates associated with 
the information collection requirements.
    49. The Commission's estimate contains two sub-estimates regarding 
burden and cost. One estimate is for the one-time compliance filing 
that will be submitted to the Commission by RTOs/ISOs for the purpose 
of revising or amending their tariffs to allow credit-related 
information sharing, as outlined in this proposal. The second estimate 
is of the ongoing costs associated with RTOs/ISOs sharing credit-
related information with each other.\45\
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    \45\ Note: The information sharing between RTOs/ISOs will not be 
submitted to the Commission; the estimate reflects the time and 
resources required for individual RTOs/ISOs to share information 
with one another.
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    50. The Commission estimates burden \46\ and cost \47\ as follows:
---------------------------------------------------------------------------

    \46\ ``Burden'' is the total time, effort, or financial 
resources expended by persons to generate, maintain, retain, or 
disclose or provide information to or for a Federal agency. For 
further explanation of what is included in the estimated burden, 
refer to 5 CFR 1320.3.
    \47\ Commission staff estimates that the respondents' skill set 
(and wages and benefits) for Docket No. RM22-13-000 are comparable 
to those of Commission employees. Based on the Commission's Fiscal 
Year 2021 average cost of $180,703/year (for wages plus benefits, 
for one full-time employee), $87.00/hour is used.

[[Page 48124]]

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       C. Annual
                                     B. Number of      number of       D. Total      E. Average burden hrs. &     F. Total annual hr.       G. Cost per
           A. Collection              respondents    responses per     number of        cost per response        burdens & total annual     respondent
                                                      respondent       responses                                          cost
                                    ..............  ..............     (Column B x  .........................  (Column D x Column E)....     (Column F /
                                                                         Column C)                                                             Column B)
--------------------------------------------------------------------------------------------------------------------------------------------------------
RTO/ISOs (one-time compliance                    6               1               6  25 hrs.; $2,175..........  150 hrs.; $13,050........          $2,175
 filing) \48\.
RTO/ISOs (ongoing information                    6               2              12  4 hrs.; $348.............  48 hrs.; $4,176..........            $696
 sharing) \49\.
                                   ---------------------------------------------------------------------------------------------------------------------
    Totals........................  ..............              --  ..............  --.......................  198 hrs.; $17,226........              --
--------------------------------------------------------------------------------------------------------------------------------------------------------

VI. Environmental Analysis

    51. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement for any action that may 
have a significant adverse effect on the human environment.\50\ We 
conclude that neither an Environmental Assessment nor an Environmental 
Impact Statement is required for this NOPR under section 380.4(a)(15) 
of the Commission's regulations, which provides a categorical exemption 
for approval of actions under sections 205 and 206 of the FPA relating 
to the filing of schedules containing all rates and charges for the 
transmission or sale of electric energy subject to the Commission's 
jurisdiction, plus the classification, practices, contracts and 
regulations that affect rates, charges, classifications, and 
services.\51\
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    \48\ The Commission's hourly and cost estimates for the one-time 
compliance filing assumes that each RTO/ISO would need to develop 
and file tariff revisions with the Commission.
    \49\ The Commission does not know the extent of information 
sharing that would occur in this proposed rule but estimates that 
information sharing may occur roughly twice per year on average, per 
RTO/ISO. The Commission invites comment by affected entities if they 
believe the estimate is unreasonable.
    \50\ Reguls. Implementing the Nat'l Envt'l Pol'y Act, Order No. 
486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Preambles 
1986-1990 ] 30,783 (1987) (cross-referenced at 41 FERC ] 61,284).
    \51\ 18 CFR 380.4(a)(15).
---------------------------------------------------------------------------

VII. Regulatory Flexibility Act Analysis

    52. The Regulatory Flexibility Act of 1980 (RFA) \52\ generally 
requires a description and analysis of proposed and final rules that 
will have significant economic impact on a substantial number of small 
entities. The Small Business Administration (SBA) sets the threshold 
for what constitutes a small business. Under SBA's size standards,\53\ 
RTOs/ISOs fall under the category of Electric Bulk Power Transmission 
and Control (North American Industry Classification System (NAICS) code 
221121), with a size threshold of 500 employees (including the entity 
and its associates).\54\
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    \52\ 5 U.S.C. 601-612.
    \53\ 13 CFR 121.201.
    \54\ The RFA definition of ``small entity'' refers to the 
definition provided in the Small Business Act, which defines a 
``small business concern'' as a business that is independently owned 
and operated and that is not dominant in its field of operation. The 
Small Business Administrations' regulations at 13 CFR 121.201 define 
the threshold for a small Electric Bulk Power Transmission and 
Control entity (NAICS code 221121) to be 500 employees. See 5 U.S.C. 
601(3) (citing section 3 of the Small Business Act, 15 U.S.C. 632).
---------------------------------------------------------------------------

    53. The six RTOs/ISOs (SPP, MISO, PJM, ISO-NE, NYISO, and CAISO) 
each employ more than 500 employees and are not considered small.
    54. According to SBA guidance, the determination of significance of 
impact ``should be seen as relative to the size of the business, the 
size of the competitor's business, and the impact the regulation has on 
larger competitors.'' \55\ We do not consider the estimated costs of 
the proposals in this NOPR to be a significant economic impact. As a 
result, we certify that the proposals in this NOPR will not have a 
significant economic impact on a substantial number of small entities.
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    \55\ U.S. Small Business Administration, ``A Guide for 
Government Agencies How to Comply with the Regulatory Flexibility 
Act,'' at 18 (May 2012), https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf.
---------------------------------------------------------------------------

VIII. Comment Procedures

    55. The Commission invites interested persons to submit comments on 
the matters and issues addressed and the regulation proposed in this 
notice to be adopted, including any related matters or alternative 
proposals that commenters may wish to discuss. Comments are due October 
7, 2022; reply comments are due November 7, 2022. Comments must refer 
to Docket No. RM22-13-000, and must include the commenter's name, the 
organization they represent, if applicable, and their address in their 
comments. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.
    56. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's website at http://www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software must be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    57. Commenters that are not able to file comments electronically 
may file an original of their comment by USPS mail or by courier-or 
other delivery services. For submission sent via USPS only, filings 
should be mailed to: Federal Energy Regulatory Commission, Office of 
the Secretary, 888 First Street NE, Washington, DC 20426. Submission of 
filings other than by USPS should be delivered to: Federal Energy 
Regulatory Commission, 12225 Wilkins Avenue, Rockville, MD 20852.

IX. Document Availability

    58. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
internet through the Commission's Home Page (http://www.ferc.gov). At 
this time, the Commission has suspended access to the Commission's 
Public Reference Room due to the President's March 13, 2020 
proclamation declaring a National Emergency concerning the Novel 
Coronavirus Disease (COVID-19).
    59. From the Commission's Home Page on the internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary,

[[Page 48125]]

type the docket number excluding the last three digits of this document 
in the docket number field.
    60. User assistance is available for eLibrary and the Commission's 
website during normal business hours from the Commission's Online 
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].

List of Subjects in 18 CFR Part 35

    Electric power rates, Electric utilities, Reporting and 
recordkeeping requirements.

    By direction of the Commission.

    Issued: July 28, 2022.
Debbie-Anne A. Reese,
Deputy Secretary.
    In consideration of the foregoing, the Commission proposes to amend 
part 35, subpart J, title 18, Code of Federal Regulations, as follows:

PART 35--FILING OF RATE SCHEDULES AND TARIFFS

0
1. The authority citation for part 35 continues to read as follows:

    Authority:  16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 
U.S.C. 7101-7352.

0
2. Amend Sec.  35.47 by adding paragraph (h) to read as follows:

Sec.  35.47   Tariff provisions regarding credit practices in organized 
wholesale electric markets.

* * * * *
    (h) Permit the sharing of market participant credit-related 
information with, and receipt of market participant credit-related 
information from, other organized wholesale electric markets for the 
purpose of credit risk management and mitigation, provided such market 
participant credit-related information is treated upon receipt as 
confidential under the terms for the confidential treatment of market 
participant information set forth in the tariff or other governing 
document of the receiving organized wholesale electric market; and 
permit the receiving organized wholesale electric market to use market 
participant credit-related information received from another organized 
wholesale electric market to the same extent and for the same purposes 
that the receiving organized wholesale electric market may use credit-
related information collected from its own market participants.

[FR Doc. 2022-16609 Filed 8-5-22; 8:45 am]
BILLING CODE 6717-01-P