Document ID: FERC-2015-1293-0001
Agency: ferc
Document Type: Proposed Rule
Title: Collection of Connected Entity Data from Regional Transmission Organizations and Independent System Operators
Posted Date: 2015-09-29T04:00Z

[Federal Register Volume 80, Number 188 (Tuesday, September 29, 2015)]
[Proposed Rules]
[Pages 58382-58393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-24281]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM15-23-000]

Collection of Connected Entity Data From Regional Transmission 
Organizations and Independent System Operators

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes 
to amend its regulations to require each regional transmission 
organization (RTO) and independent system operator (ISO) to 
electronically deliver to the Commission, on an ongoing basis, data 
required from its market participants that would; first identify the 
market participants by means of a common alpha-numeric identifier; and 
secondly list their ``Connected Entities,'' which includes entities 
that have certain ownership, employment, debt, or contractual 
relationships to the market participants, as specified in this NOPR; 
and finally describe in brief the nature of the relationship of each 
Connected Entity. Such information will assist screening and 
investigative efforts to detect market manipulation, an enforcement 
priority of the Commission. The initiative would also assist market 
monitors for the RTOs and ISOs in their individual and joint 
investigations of potential cross-market manipulation. Unless the RTOs 
and ISOs request continuation of existing affiliate disclosure 
requirements based on a particularized need, the Commission expects 
that this new disclosure obligation will supplant all existing 
affiliate disclosures requirements contained in the RTOs and ISOs 
tariffs. The proposed definitional uniformity of the term ``Connected 
Entity'' across all of the RTOs and ISOs may help ease compliance 
burdens on market participants that are active in more than one RTO or 
ISO, and that are now required to submit affiliate information that may 
be unique to each of the organized markets in which they participate.

DATES: Comments on the proposed rule are due November 30, 2015.

ADDRESSES: Comments, identified by docket number, may be filed in the 
following ways:
     Electronic Filing through http://www.ferc.gov. Documents 
created electronically using word processing software should be filed 
in native applications or print-to-PDF format and not in a scanned 
format.
     Mail/Hand Delivery: Those unable to file electronically 
may mail or hand-deliver comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the Comment 
Procedures Section of this document.

FOR FURTHER INFORMATION CONTACT:
David Pierce (Technical Information), Office of Enforcement, Federal 
Energy Regulatory Commission, 888 First Street NE, Washington, DC 
20426, (202) 502-6454, david.pierce@ferc.gov.
Kathryn Kuhlen (Legal Information), Office of Enforcement, Federal 
Energy Regulatory Commission, 888 First Street NE, Washington, DC 
20426, (202) 502-6855, kathryn.kuhlen@ferc.gov

SUPPLEMENTARY INFORMATION: 
    1. In this Notice of Proposed Rulemaking (NOPR), the Federal Energy 
Regulatory Commission (Commission) proposes, pursuant to sections 222, 
301(b), 307(a) and 309 of the Federal Power Act (FPA),\1\ to amend its 
regulations to require each regional transmission organization (RTO) 
and independent system operator (ISO) to electronically deliver to the 
Commission, on an ongoing basis, data required from its market 
participants that would: (i) Identify the market participants by means 
of a common alpha-numeric identifier; (ii) list their ``Connected 
Entities,'' which includes entities that have certain ownership, 
employment, debt, or contractual relationships to the market 
participants, as specified in this NOPR; and (iii) describe in brief 
the nature of the relationship of each Connected Entity. The uniform 
identification of market participants, together with the listing of 
entities that comprise a network of common interests, would enhance the 
Commission's efforts to detect and deter market manipulation, a central 
objective of the Commission as identified in its FY 2014-2018 Strategic 
Plan.\2\ Unless the RTOs and ISOs request continuation of existing 
affiliate disclosure requirements based on a particularized need, the 
Commission expects that this new disclosure obligation will supplant 
all existing affiliate disclosures requirements contained in the RTOs 
and ISOs tariffs.
---------------------------------------------------------------------------

    \1\ 16 U.S.C. 824v, 825(b), 825f(a), 825(h).
    \2\ Federal Energy Regulatory Commission Strategic Plan FY 2014-
2018, Objective 1.2 (Mar. 2014), available at http://www.ferc.gov/about/strat-docs/FY-2014-FY-2018-strat-plan.pdf.
---------------------------------------------------------------------------

    2. In the Strategic Plan, the Commission cited monitoring and 
surveillance activities as a key function in meeting the objective of 
detecting and deterring market manipulation.\3\ In recent years the 
Commission has greatly enhanced its capabilities in this regard, having 
developed automated screens of market activities and set up analytical 
procedures to detect potential market manipulation. Understanding the 
ownership, employment, debt, and contractual relationships of market 
participants would provide context for such data, and help determine 
whether there appears to be a legitimate business rationale for 
seemingly anomalous trading patterns, or whether there may be market 
manipulation, fraud, or abuse. This in turn will further the 
Commission's goal of detecting and deterring possible market 
manipulation. As we explain below, the existing affiliate disclosure 
requirements do not appropriately enable the Commission to identify and 
monitor these business relationships.
---------------------------------------------------------------------------

    \3\ Id.
---------------------------------------------------------------------------

I. Background

    3. Beginning in the late 1960s, the electric industry gradually 
transformed itself from one populated by mostly self-sufficient 
vertically integrated utilities compensated by cost-based rates, to

[[Page 58383]]

competitive markets characterized by open transmission access, partial 
disaggregation of generation and transmission, and market-based 
rates.\4\ Competitive markets brought with them the potential for 
market manipulation, and Congress, acting in response to the abuses 
characterizing the Western Energy Crisis of 2000-2001, passed the 
Energy Policy Act of 2005 (EPAct 2005).\5\ This legislation, among 
other things, gave the Commission authority to address market 
manipulation, including the ability to assess substantial civil fines 
and seek criminal penalties.\6\
---------------------------------------------------------------------------

    \4\ Enhancement of Electricity Market Surveillance and Analysis 
through Ongoing Electronic Delivery of Data from Regional 
Transmission Organizations and Independent System Operators, Order 
No. 760, 77 FR 26674 (May 7, 2012), FERC Stats. & Regs. ] 31,330, at 
P 2 (2012).
    \5\ Pub. L. 109-58, 119 Stat. 594.
    \6\ See 16 U.S.C. 825o (criminal penalties); 16 U.S.C. 825o-1 
(civil fines).
---------------------------------------------------------------------------

    4. In 2012, utilizing the authority granted by Congress under the 
FPA, the Commission expanded the tools available to staff to 
investigate market activity for potential manipulation. In Order No. 
771,\7\ the Commission required e-Tag Authors and Balancing Authorities 
to ensure Commission access to their e-Tags. And in Order No. 760,\8\ 
the Commission required the RTOs and ISOs to electronically deliver to 
the Commission, on a regular basis, their existing data relating to 
physical and virtual offers and bids, market awards, resource outputs, 
marginal cost estimates, shift factors, financial transmission rights, 
internal bilateral contracts, uplift, and interchange pricing. These 
orders have provided needed tools for staff to monitor market 
activities.
---------------------------------------------------------------------------

    \7\ Availability of E-Tag Information to Commission Staff, Order 
No. 771, 77 FR 76367 (Dec. 28, 2012), FERC Stats. & Regs. ] 31,339 
(2012), order on rehearing and clarification, 142 FERC ] 61,181 
(2013).
    \8\ Order No. 760, FERC Stats. & Regs. ] 31,330 at PP 8-19.
---------------------------------------------------------------------------

    5. The Commission has also been granted access by the Commodity 
Futures Trading Commission (CFTC) to its Large Trader Report, and the 
information contained therein has significantly added to the 
Commission's ability to carry out its enforcement responsibilities. In 
addition, on January 2, 2014, the Commission and the CFTC signed a new 
Memorandum of Understanding (MOU) to share information in connection 
with market surveillance and investigations into potential market 
manipulation, fraud, or abuse.\9\ This MOU establishes procedures for 
sharing information of mutual interest related to market surveillance 
and investigative matters, while maintaining confidentiality and data 
protection.\10\
---------------------------------------------------------------------------

    \9\ Memorandum of Understanding Between the Commodity Futures 
Trading Commission and the Federal Energy Regulatory Commission 
Regarding Information Sharing and Treatment of Proprietary Trading 
and Other Information (Jan. 2, 2014), available at http://www.ferc.gov/legal/mou/mou-ferc-cftc-info-sharing.pdf.
    \10\ Id.
---------------------------------------------------------------------------

    6. Nonetheless, despite increased access to trading data, the 
Commission cannot fully utilize this information in order to detect and 
deter market manipulation because of uncertainty regarding the identity 
of a given market participant, which may trade under different 
identifiers in different markets and venues. The Commission also lacks 
a clear window into the relationships between market participants and 
other entities, which can be complex. Without an understanding of which 
companies share ownership or debt interests, or who may function in key 
employment or other contractual roles (such as asset management), it 
can be difficult to ascertain which individuals or companies may 
benefit from a given transaction or, indeed, who may be jointly 
participating in a common course of conduct.
    7. Currently, each RTO and ISO requires market participants to 
provide it with a list of the participant's affiliates.\11\ However, 
requirements vary as to the nature of a reportable affiliate 
relationship and the frequency for updating the information. In 
addition, for purposes of ferreting out potential market manipulation, 
it is important to explore relationships that extend beyond corporate 
affiliation. Such additional relationships may involve contractual 
relationships such as tolling and asset management agreements, or debt 
structures that are convertible to ownership interests.
---------------------------------------------------------------------------

    \11\ See, e.g., the following sections from the tariffs of the 
RTOs/ISOs: California Independent System Operator Corporation 
(CAISO): Section 39.9 and 4.10.1.5.1 (for congestion revenue 
rights); ISO New England Inc. (ISO-NE): Section I.3.5; Midcontinent 
Independent System Operator, Inc. (MISO): Attachment L.1.A.5 (credit 
application evaluation disclosure requirement), Attachment L.1.B.5 
(ongoing credit evaluation disclosure requirement); New York 
Independent System Operator, Inc. (NYISO): Section 2.15; PJM: 
Section 216.2.1 (Interconnection customer affiliate disclosure 
requirement), Attachment Q 1.A.5 (credit application evaluation 
disclosure requirement), Attachment Q 1.B.5 (ongoing credit 
evaluation disclosure requirement).
---------------------------------------------------------------------------

    8. The existing affiliate disclosure rules do not provide the tools 
necessary for the Commission to sufficiently monitor these increasingly 
complex business relationships that impact our jurisdictional markets. 
Thus, the Commission believes it is desirable to use a new term, one 
that is free of any associations that have developed around the term 
``affiliate,'' and one that is uniform across all of the RTOs and ISOs, 
to describe a relationship of interest in probing for potential market 
manipulation. We propose the term ``Connected Entity,'' and further 
propose to make the definition of that term uniform across the 
organized electric markets.

II. Discussion

Need for Connected Entity Information

    9. The Commission employs a variety of screens to identify 
anomalous trading. When it detects such anomalies, it attempts to 
determine whether the behavior is legitimate market activity. It does 
this in large part by analyzing the circumstances surrounding the 
activity, including trading patterns and trader explanations. Some 
patterns that have emerged to date are: limited risk or riskless 
combinations of trades to enhance the value of a position or portfolio, 
such as wash trades; repetitive, uneconomic physical trading or flows 
to benefit a position; trading to affect the formation of an index 
price; withholding physical generation to benefit a financial and/or 
physical position; and using virtual bids to benefit a financial and/or 
physical position.
    10. Rather than performing a trade or other action that results in 
a direct benefit to itself, a market participant might instead take 
actions that benefit another entity that bears a financial or legal 
relationship to it. Entities under common control, whether by 
ownership, beneficial interest, or contractual relationships, might 
also collude to set prices by taking positions that together result in 
a market manipulation. An understanding of these relationships is 
crucial in exploring the design and possible purposes behind a trading 
pattern, from which inferences of intent can be drawn and investigated. 
The existing affiliate disclosure requirements imposed through the RTOs 
and ISOs tariffs do not capture all of these business relationships.
    11. As evidence of intent is critical in establishing whether there 
has been market manipulation,\12\ the Commission can better monitor and 
protect the markets from wrongdoing if these relationships are fully 
known.

[[Page 58384]]

Moreover, more complete information about these relationships will 
reduce the number of informal inquiries in response to false positive 
surveillance screen trips that may result from an incomplete picture of 
market participants' incentive structures.
---------------------------------------------------------------------------

    \12\ In Order No. 670, the Commission promulgated regulations 18 
CFR 1c.1 and 1c.2, which prohibit manipulation in the natural gas 
and electric energy markets. In that order, the Commission stated 
that ``any violation of the Final Rule requires a showing of 
scienter.'' Prohibition of Energy Market Manipulation, Order No. 
670, FERC Stats. & Regs. ] 31,202, at P 52 (2006).
---------------------------------------------------------------------------

Sources and Completeness of Connected Entity Information

    12. Although there are a few third-party sources of public 
information that contain data about the affiliate relationships of 
entities trading in the electric energy markets, their information and 
manner of collection is insufficient for the Commission's market 
monitoring responsibilities. These sources include vendors such as Dun 
& Bradstreet, SNL Financial, and Ventyx. The primary service provided 
by these companies is tracking trading information, not compiling 
affiliate data, and their affiliate information is generally derived 
from public sources that do not cover all market participants. Further, 
whether such information is current or complete cannot be ascertained 
from the listings. Nor do such listings include entities that are 
connected by contractual relationships, rather than ownership. For all 
these reasons, an up-to-date, reliable, and complete listing of 
Connected Entities cannot be obtained from these third-party sources.
    13. Obtaining Connected Entity data from RTOs and ISOs leaves 
unaddressed similar data from entities operating outside the organized 
electric markets. However, the Commission has estimated, using Electric 
Quarterly Report (EQR) data and existing affiliation information 
gleaned from market-based rate filings and other available sources, 
that approximately 90 percent of the reported wholesale sales of 
electricity subject to the Commission's jurisdiction are made either by 
market participants in one or more of the six RTOs and ISOs, or by 
companies related by ownership to such a market participant.\13\ 
Therefore, access to Connected Entity data for all the market 
participants in each of the RTOs and ISOs would provide most of such 
data for all the transactions of interest in the Commission's electric 
manipulation screening. We invite comment on the desirability and 
feasibility of expanding our proposal to require the submission of 
Connected Entity information from non-RTO/ISO market participants, and 
on any difficulties commentators might perceive to exist in doing so.
---------------------------------------------------------------------------

    \13\ These RTOs and ISOs are: ISO-NE., NYISO, PJM, MISO, 
Southwest Power Pool, Inc., and CAISO. The Electric Reliability 
Council of Texas is non-jurisdictional and not included in the 
calculation. Staff determined this percentage by examining the 
Electric Quarterly Reports, which must be filed by all public 
utilities and by non-public utilities that trade above a de minimus 
amount. See 18 CFR 35.10(b) (2015).
---------------------------------------------------------------------------

    14. The Commission recognizes that this proposal would place 
additional burden on market participants to implement the new reporting 
requirement and to submit the Connected Entity information to the RTOs 
and ISOs as proposed. However, we believe that the benefits of this 
proposal will outweigh the additional burden imposed on market 
participants. Moreover, as noted above, each of the six RTOs and ISOs 
already requires its market participants to submit data identifying 
certain affiliate relationships. It is possible that some, if not all, 
market participants will be able to use its existing processes for 
reporting affiliate information to the RTOs and ISOs to lessen the 
burden of this proposed reporting. For market participants that are 
active in more than one market, it is also possible that the burden of 
making a uniform Connected Entity filing in all those markets, once the 
initial implementation period is over, would be no greater than the 
current burden of making multiple affiliate filings, each of which is 
unique to its particular RTO or ISO. For participants in only one 
market, we recognize that there will likely be an increase in the 
administrative time needed for compliance. As for the RTOs and ISOs 
themselves, we believe they would incur the initial implementation 
costs required to make compliance filings to amend their tariffs to 
conform the filed information to the new Commission standards, and 
revising their collection processes to be consistent with those 
standards.

Authority To Acquire Connected Entity Information

    15. The Commission has the authority to require the type of record 
keeping and submittals contemplated in this NOPR. As discussed below, 
the Commission's anti-manipulation authority under section 222 of the 
FPA, taken together with its investigative authority under section 
307(a) of the FPA, its administrative powers under section 309 of the 
FPA, and its inspection and examination authority under section 301(b) 
of the FPA, provides ample basis for accessing Connected Entity data.
    16. Section 222 of the FPA grants the Commission authority over the 
prohibition of market manipulation in connection with the purchase or 
sale of electric energy and transmission subject to the Commission's 
jurisdiction.\14\ It also prohibits manipulation by ``any entity,'' 
including entities exempted from the Commission's rate-related 
jurisdiction. Section 301(b) of the FPA provides that the Commission 
shall at all times have access to, and the right to inspect and examine 
all accounts and records of public utilities,\15\ which includes RTOs 
and ISOs. Section 309 of the FPA grants the Commission the authority to 
``perform any and all acts, and to prescribe, issue, make, amend, and 
rescind such orders, rules and regulations as it may find necessary and 
appropriate to carry out the provisions of [the FPA].'' \16\ And 
section 307(a) of the FPA provides that the Commission has authority to 
investigate any facts, conditions, practices, or matters it may deem 
necessary or proper to determine whether any person, electric utility, 
transmitting utility, or other entity may have violated or might 
violate the FPA or the Commission's regulations.\17\ It also has 
investigatory authority to aid in the enforcement of the FPA or the 
Commission's regulations, or to obtain information about wholesale 
electric energy sales or the transmission of electric energy in 
interstate commerce.\18\ This investigatory authority is not limited to 
a particular case or controversy, but allows an agency to ``investigate 
merely on suspicion that the law is being violated, or even just 
because it wants assurance that it is not.'' \19\
---------------------------------------------------------------------------

    \14\ 16 U.S.C. 824v.
    \15\ 16 U.S.C. 825(b).
    \16\ 16 U.S.C. 825(h).
    \17\ 16 U.S.C. 825f(a).
    \18\ Id.
    \19\ United States v. Morton Salt, 338 U.S. 632, 642 (1950).
---------------------------------------------------------------------------

    17. The Commission has already required the RTOs and ISOs to 
provide this type of information to the Commission. Most notably, in 
Order No. 760, the Commission required the RTOs and ISOs to 
electronically deliver to it, on an ongoing basis, data relating to 
physical and virtual offers and bids, market awards, resource outputs, 
marginal cost estimates, shift factors, financial transmission rights, 
internal bilateral contracts, uplift, and interchange pricing.\20\ The 
information sought under this NOPR would typically be provided with 
less frequency than that which the RTOs and ISOs submit under Order No. 
760. And the submittal of Connected Entity data would be transmitted 
through the same channels as the RTOs and ISOs already employ for Order 
No. 760 data.
---------------------------------------------------------------------------

    \20\ See Order No. 760, FERC Stats. & Regs. ] 31,330 at Summary.

---------------------------------------------------------------------------

[[Page 58385]]

Additional Benefits and Confidentiality of Connected Entity Data

    18. Establishing common identifiers and a uniform definition of 
Connected Entity, as is proposed in this NOPR, would have the 
additional benefit of assisting the RTO/ISO market monitors in their 
responsibilities to oversee the markets. Market monitors could assess 
cross-market transactions and compare their data with that produced by 
their neighboring market monitors, assured that the data was accurate 
and consistent.\21\
---------------------------------------------------------------------------

    \21\ See Southwest Power Pool, Inc., 137 FERC ] 61,046 at P 19 
(2011) (``[T]he Commission clarifies that Market Monitoring Units, 
RTOs, and ISOs may communicate referral information with each other 
across regions . . . The Commission strongly encourages this type of 
communication, as long as reasonable precautions are taken to ensure 
that all referral information remains non-public.''); see also New 
York Independent System Operator, 136 FERC ] 61,116 (2011).
---------------------------------------------------------------------------

    19. Understanding the relationship between connected entities can 
be an important aspect of the Commission's ex post analysis, which is a 
critical element of the market-based rate program. In Lockyer, the 
Ninth Circuit cited with approval the Commission's dual requirement of 
an ex ante finding of the absence of market power and sufficient post-
approval reporting requirements, finding that the Commission does not 
rely on ex ante market forces alone in approving market-based rate 
tariffs. In particular, the court found that the ongoing oversight and 
timely reconsideration of market-based rate authorization under section 
205 of the FPA enables the Commission to meet its statutory duty to 
ensure that all rates are just and reasonable.\22\
---------------------------------------------------------------------------

    \22\ Cal. ex rel. Lockyer v. FERC, 383 F.3d 1006 (9th Cir. 
2004). See also Cal. v. FERC, 784 F.3d 1267 (9th Cir. 2015).
---------------------------------------------------------------------------

    20. The Commission anticipates that submitting Connected Entity 
data would not place market participants under increased risk in 
relation to the disclosure of confidential or proprietary information. 
Some of the information to be gathered by the RTOs and ISOs from 
participants is already publicly available. This would include, in the 
case of publicly-traded companies, data found in their Securities and 
Exchange Commission (SEC) filings; in the case of contractual control 
over a jurisdictional asset, the data would generally be available 
through EQR reporting requirements. To the extent, however, that 
Connected Entity information is not already public, we intend that the 
collection of Connected Entity information be treated as non-public, to 
the same extent as is Order No. 760 data and any other investigatory 
material submitted under Part 1b of the Commission's regulations.\23\
---------------------------------------------------------------------------

    \23\ 18 CFR part. 1b (2015).
---------------------------------------------------------------------------

    21. Connected Entity information that is commercially sensitive, 
such as all or part of the contractual arrangements among entities, may 
satisfy the requirements of exemption 4 of the Freedom of Information 
Act (FOIA), which protects ``trade secrets and commercial or financial 
information obtained from a person [that is] privileged or 
confidential.'' \24\ The non-public information to be gathered under 
the proposed rule may also fall within the ambit of FOIA exemption 7, 
which protects certain ``records and information compiled for law 
enforcement purposes.'' \25\
---------------------------------------------------------------------------

    \24\ 5 U.S.C. 552(b)(4); accord 18 CFR 388.107(d) (2015).
    \25\ 5 U.S.C. 552(b)(7); accord 18 CFR 388.107(g) (2015).
---------------------------------------------------------------------------

Proposed Definition of a Connected Entity

    22. Over the years, the term ``affiliate'' has been used frequently 
in tariffs and regulations, but not always with exactly the same 
definition. The term has also usually centered on relationships 
involving control by virtue of an ownership interest.\26\ However, in 
carrying out the Commission's responsibility to oversee the markets for 
possible market manipulation, other relations may be equally worthy of 
examination. We thus propose an entirely new term, to be used in 
connection with investigatory data gathered for the purposes identified 
in this NOPR, that of ``Connected Entity.'' We propose to revise 18 CFR 
35.28(g)(4) to define Connected Entity as follows:
---------------------------------------------------------------------------

    \26\ See, e.g., 18 CFR 35.36(a)(9) (2015).
---------------------------------------------------------------------------

    23. A Connected Entity, which includes natural persons, is one 
which stands in one or more of the following relationships to a market 
participant:
    a. An entity that directly or indirectly owns, controls, or holds 
with power to vote, 10 percent or more of the ownership instruments of 
the market participant, including but not limited to voting and non-
voting stock and general and limited partnership shares; or an entity 
10 percent or more of whose ownership instruments are owned, 
controlled, or held with power to vote, directly or indirectly, by a 
market participant; or an entity engaged in Commission-jurisdictional 
markets that is under common control with the market participant;
    b. The chief executive officer, chief financial officer, chief 
compliance officer, and the traders of a market participant (or 
employees who function in those roles, regardless of their titles);
    c. An entity that is the holder or issuer of a debt interest or 
structured transaction that gives it the right to share in the market 
participant's profitability, above a de minimis amount, or that is 
convertible to an ownership interest that, in connection with other 
ownership interests, gives the entity, directly or indirectly, 10 
percent or more of the ownership instruments of the market participant; 
or an entity 10 percent of more of whose ownership instruments could, 
with the conversion of debt or structured products and in combination 
with other ownership interests, be owned or controlled, directly or 
indirectly, by a market participant; or
    d. Entities that have entered into an agreement with the market 
participant that relates to the management of resources that 
participate in Commission-jurisdictional markets, or otherwise relates 
to operational or financial control of such resources, such as a 
tolling agreement,\27\ an energy management agreement, an asset 
management agreement,\28\ a fuel management agreement, an operating 
management agreement, an energy marketing agreement, or the like.\29\
---------------------------------------------------------------------------

    \27\ Tolling agreements are common in the energy industry, and 
in essence function as leasing contracts or options on a generating 
plant wherein the ``toller'' has the right to the plant output at 
his or her discretion.
    \28\ Asset management agreements, in general, are contractual 
relationships where a party agrees to manage fuel supply and 
delivery arrangements, including transportation, for another party, 
and to consume the electricity produced or share in some fashion in 
the revenues from the sale of that electricity.
    \29\ As the Commission observed in Order No. 697, energy/asset 
managers provide a variety of services, including, but not limited 
to, operating generation plants (sometimes under tolling 
agreements), acting as billing agents, bundling transmission and 
power for customers, and scheduling transactions. Market-Based Rates 
for Wholesale Sales of Electric Energy, Capacity and Ancillary 
Services by Public Utilities, Order No. 697, FERC Stats. & Regs. ] 
31,252, 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), aff'd sub nom. Mont. Consumer Counsel v. 
FERC, 659 F.3d 910 (9th Cir. 2011), cert. denied, 133 S. Ct. 26 
(2012). Regardless of the label attached to a particular contract, 
all such services would fall within the ambit of the reporting 
requirement proposed in this NOPR.
---------------------------------------------------------------------------

    We invite comment on the appropriate threshold for a de minimis 
share of a company's profits.

Legal Entity Identifiers

    24. In the past, the Commission has considered methods to ensure 
that there is no confusion as to the identification of entities subject 
to its jurisdiction. For

[[Page 58386]]

example, it formerly required usage of the DUNS identification system 
in EQR filing requirements. However, the Commission found that system 
to be an imprecise tool for the purpose, and removed the requirement in 
2012.\30\ At that same time, it considered various alternatives to the 
use of DUNS numbers, but found none that would be adequate.\31\
---------------------------------------------------------------------------

    \30\ Electricity Market Transparency Provisions of Section 220 
of the Federal Power Act, Order No. 768, FERC Stats. & Regs. ] 
31,336, at P 171 (2012); orders on reh'g and clarification, Order 
No. 768-A, 143 FERC ] 61,054 (2013) and order on reh'g, Order No. 
768-B, 150 FERC ] 61,075 (2015).
    \31\ Order No. 768, FERC Stats. & Regs. ] 31,336 at P 171.
---------------------------------------------------------------------------

    25. However, a relatively new system is rapidly becoming the 
globally accepted method to ensure accurate identification of legal 
entities. That system involves the establishment of Legal Entity 
Identifiers (LEIs), which are unique IDs assigned to single entities. 
In this country, adoption of the LEI system has been accelerated in 
response to the Dodd-Frank Act, which mandated initiatives to improve 
the quality of financial data available to regulators and others.\32\ 
The Office of Financial Research (OFR), which was created under the 
Dodd-Frank Act, is leading the effort to establish uniform LEIs and 
several federal agencies involved in the regulation of financial 
transactions have, or are in the process of, mandating the use of LEIs 
for certain purposes. Among these are the CFTC and the SEC, which now 
require their use for certain swaps-related activities.\33\
---------------------------------------------------------------------------

    \32\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
12 U.S.C. 5301, at 5343 (a).
    \33\ See, e.g., 17 CFR 45.4, 45.6 (2015) (CFTC); Regulation 
SBSR--Reporting and Dissemination of Security-Based Swap 
Information, 80 FR 14564, 17 CFR part 242 (2015) (SEC) (published in 
the Federal Register as a final rule on March 19, 2015, with an 
effective date of May 18, 2015).
---------------------------------------------------------------------------

    26. LEIs are issued by Local Operating Units (LOUs) of the Global 
LEI System, and as of December 31, 2014, over 330,000 entities from 189 
countries had obtained LEIs from 20 operational issuers endorsed by the 
LEI Regulatory Oversight Committee (ROC). The Global LEI Foundation was 
established in June of 2014 as a not-for-profit organization overseen 
by the ROC to act as its operational arm, and which maintains a 
centralized database of LEIs and corresponding reference data.
    27. Obtaining an LEI is relatively inexpensive (approximately $250, 
with annual upkeep fees of approximately $150). Application is made by 
a legal entity, such as a corporation or partnership, and the LOU 
verifies authenticity of the entity by checking official governmental 
records. It then assigns to it an LEI, a 20-digit alpha-numeric code 
unique to that entity. A given alpha-numeric string is thus a permanent 
identifier, and is also exclusive; that is, no other entity is assigned 
that LEI, and the entity itself may not obtain another LEI.\34\
---------------------------------------------------------------------------

    \34\ See the LEI ROC Web site for further information on the LEI 
identifier system. The Legal Entity Identifier Regulatory Oversight 
Committee--LEI ROC, http://www.leiroc.org.
---------------------------------------------------------------------------

    28. We believe that the establishment of a reliable, standard 
identification system will greatly benefit staff's ability to conduct 
investigations of trading patterns in the energy markets. It appears to 
us that the use of LEIs is the best method to achieve this goal. We 
therefore propose that the RTOs and ISOs require their market 
participants to obtain LEIs, and to report in their Connected Entity 
Data filing their own LEI and the LEI of each of their Connected 
Entities, if the Connected Entity has obtained one. However, the LEI 
system is still relatively new, and we invite comments on the 
feasibility of its use, on whether any other system besides LEIs would 
be a preferable method of achieving uniform identification, and on 
whether waivers might be appropriate in given situations.

III. Requirements for Collection of Connected Entity Data

    29. As part of this rulemaking, we propose to require the 
submission from the RTOs and ISOs of Connected Entity information 
pertaining to each of its market participants.\35\ To meet this 
obligation, we propose that each RTO and ISO make a compliance filing 
setting forth in its tariff the requirement that its market 
participants submit to it a list of their Connected Entities, in the 
format approved by the Commission. This list would include all of a 
market participant's Connected Entities, as defined above. The 
Connected Entities need not be engaged in activities in the same 
markets as the market participant for their inclusion to be required. 
The RTOs and ISOs would in turn transmit this information to the 
Commission in its native format.
---------------------------------------------------------------------------

    \35\ For this purpose, the term ``market participant'' includes 
all entities that participate in any of the various markets of the 
RTO and ISO in question, whether as a seller or a buyer.
---------------------------------------------------------------------------

    30. As a condition of participating in any of the RTO/ISO markets, 
the market participants would have to have on file with that RTO or ISO 
their Connected Entity data, which must be updated within 15 days of a 
change in status of the data. In addition, it would be a condition of 
participation for each market participant to certify, on a yearly 
basis, that its Connected Entities filed data is comprehensive and 
accurate.
    31. We propose that the RTOs and ISOs include in their tariffs the 
authority (although not the obligation) to audit market participants to 
determine if their submitted Connected Entity data is accurate, 
complete, and up to date. Commission staff may also from time to time 
conduct audits for this purpose.
    32. As discussed above, we also propose that each market 
participant be required to acquire an LEI, and include its own LEI and 
the LEIs of each of its Connected Entities (if known) on its submitted 
Connected Entity list.
    33. We further propose that the information requested be delivered 
to the RTOs and ISOs in a form and manner acceptable to the Commission. 
By way of illustration, we envision that the following formats for 
submission of Connected Entity data would be mandated:
     A table that contains rows with columns identifying the 
market participant by LEI, legal name, RTO or ISO, and RTO/ISO assigned 
identifier, if any. If there is more than one RTO/ISO identifier, there 
would be a separate row for each, with the preceding columns remaining 
the same. If the market participant participates in more than one RTO 
or ISO, there would be additional rows setting forth all the categories 
mentioned for each RTO/ISO. Thus, a row would appear as follows 
(columns separated by a star):

LEI of market participant (MP)* Legal Name of MP * RTO/ISO * RTO/ISO 
Identifier of MP

     A table or tables that disclose the market participant's 
relationships with each of its Connected Entities. Each row would 
address a single Connected Entity and the type of relationship with the 
market participant (ownership, employee, debt, contract). The LEI and 
the legal name of the market participant would be placed in the first 
two columns, respectively, and the LEI and the legal name of the 
Connected Entity in the third and fourth columns, respectively, and the 
type of relationship in the fifth column. For ownership, the date the 
direct, indirect or beneficial ownership reached 10 percent would be 
stated, as well as the total ownership as of the date of the report. 
For employees, which might be set forth in a separate table, the full 
legal name of the employee would be stated and the person's title and 
date of hire. For debt, the date the debt was incurred would be stated, 
and the debt holder and indebted party identified. For contracts, the 
start and end date of the

[[Page 58387]]

contract would be stated as well as a brief descriptor of the contract 
type (tolling, asset management, etc.). If there are multiple 
relationships with the same Connected Entity, separate rows would be 
used for each. Thus, a row would appear as follows:

LEI of MP * Legal Name of MP * LEI of Connected Entity * Legal Name of 
Connected Entity * relationship type (ownership, employee, debt, 
contract).

    This table would also provide, whether by footnote or other 
reference means, a more detailed description of the particular 
relationship given. For a contract, for instance, the major provisions 
of the contract would be listed, such as effective date, term, renewal 
provisions, and matters pertinent to the type of contract, such as heat 
rate curve for a tolling agreement, the MW or MWh curves for a power 
purchase agreement, together with identification of the generator or 
plant involved, the nature of any output sharing, and the like.
    34. The repetition of cells necessitated by the foregoing format, 
while it will make the document physically longer than might otherwise 
be the case, is needed so that the appropriate pairing of entities can 
be presented in a machine-readable manner. An appendix is included with 
this NOPR to provide some examples of how these submittals might be 
structured. We invite comments on formatting suggestions, as well as on 
the substantive matters set forth in this Notice of Proposed 
Rulemaking.
    35. Finally, we propose that in their compliance filings, RTOs and 
ISOs list all affiliate information disclosure requirements. As we 
anticipate that the Connected Entity submissions will provide the RTOs 
and ISOs with as much and more information as they currently receive 
from the existing affiliate disclosures, we propose eliminating all 
existing affiliate disclosure requirements. However, if there is some 
particularized need that would not be met by the Connected Entity 
submissions, the RTOs and ISOs may request in their compliance filings 
to retain any such disclosure requirements, in which case they would 
need to include justifications for such retention. Insofar as possible, 
duplicative information submission should be avoided. We also solicit 
comments as to whether it would be feasible and more efficient for the 
RTOs and ISOs to utilize the Connected Entities information that would 
be submitted through this proposal for the same purposes that they 
currently use the information provided through their existing affiliate 
disclosure requirements. In particular, we solicit comments regarding 
whether replacing existing affiliate disclosure requirements in the RTO 
and ISO tariffs with the Connected Entity submission obligations will 
adversely affect implementation of other provisions of the RTO and ISO 
tariffs. If so, then how? Such comments may also address whether any 
changes should be made to the data table formats to allow RTOs and ISOs 
to utilize Connected Entities information for other purposes.

IV. Information Collection Statement

    36. The collections of information contained in this proposed rule 
are being submitted to the Office of Management and Budget (OMB) for 
review under section 3507(d) of the Paperwork Reduction Act of 1995, 44 
U.S.C. 3507(d). We solicit comments on the Commission's need for this 
information, whether the information will have practical utility, the 
accuracy of the provided burden estimates, ways to enhance the quality, 
utility, and clarity of the information to be collected, and any 
suggested methods for minimizing respondents' burden, including the use 
of automated information techniques. Respondents subject to the filing 
requirements of this proposed 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.
    37. The proposed rule does not require entities other than RTOs/
ISOs to report information to the Commission. The RTOs/ISOs will gather 
the required data from the market participants directly. However, we 
include burden estimates not only for RTOs/ISOs but also for market 
participants and Connected Entities.\36\
---------------------------------------------------------------------------

    \36\ The estimated hourly cost (salary plus benefits) provided 
in this section are based on the figures for May 2014 posted by the 
Bureau of Labor Statistics for the Utilities sector (available at 
http://www.bls.gov/oes/current/naics2_22.htm#13-0000). The hourly 
estimates for salary plus benefits are: Legal (code 23-0000), 
$129.87, computer and mathematical (code 15-0000), $58.25, 
information systems manager (code 11-3021), $94.55, IT security 
analyst (code 15-1122), $63.55, auditing and accounting (code 13-
2011), $51.11, information and record clerk (Referred to as 
administrative work in the body) (code 43-4199), $37.50.
---------------------------------------------------------------------------

    38. We recognize that there will be an initial implementation 
burden associated with providing the Commission the requested data. 
This includes submitting a compliance filing to the Commission. We 
estimate 30 hours for each RTO/ISO to prepare the filing at a cost of 
$3,896 per filer.
    39. Each RTO and ISO already submits electronic market data to the 
Commission in accordance with Order No. 760. We propose that these same 
channels be used to handle the relatively small increase in data 
submission proposed under this rulemaking. RTO/ISO staff will need to 
add additional tables to their databases and make provisions for those 
tables to be included in regular transmissions. We estimate eight hours 
for each RTO/ISO to make these additions at an average cost of $624 per 
filer.\37\
---------------------------------------------------------------------------

    \37\ The following weightings were applied to estimate the 
average hourly cost (salary plus benefits) of $78.00; legal staff, 
1/6, information systems manager, 1/6, computer and mathematical, 1/
3, information security analyst, 1/3.
---------------------------------------------------------------------------

    40. Each RTO/ISO will also need to modify its current process for 
accepting information from market participants. We estimate 320 person-
hours (costs weighted as previously described) for each RTO/ISO to make 
these changes at an average cost of $24,960 each.
    41. Incremental, ongoing maintenance costs for RTOs/ISOs are 
assumed to be minimal. We estimate maintenance to require 40 person-
hours per year at an average annual cost per RTO/ISO of $3,120.
    42. This NOPR also proposes that RTOs/ISOs have the option to audit 
market participants to verify the accuracy and completeness of their 
submissions. If each of the six RTOs/ISOs chooses to audit an average 
of 10 market participants per year, we estimate this to require 40 
hours per audit for a total annual auditing burden per RTO/ISO of 400 
hours and annual cost of $20,444.
    43. Market participants, through their affiliate disclosures, 
already submit information about some of their Connected Entities to 
the RTOs/ISOs. This proposed rule enlarges the information to be 
collected and standardizes its format. It is estimated that for multi-
market participants, the additional cost of initial compliance and the 
ongoing costs of maintaining that information will be somewhat offset 
by the savings of standardization across the several RTOs/ISOs. This 
NOPR proposes that market participants obtain and maintain an LEI, 
which we understand currently costs about $250 to obtain and $150 per 
year thereafter to maintain. While there will be an initial 
implementation burden associated with providing the RTOs/ISOs the 
requested data, these costs may vary widely from participant to 
participant largely in proportion to the size of the entity. Since the 
data related to the Connected Entity is information readily available 
to the market participant, the costs of

[[Page 58388]]

gathering the data is expected to be largely administrative in nature 
with some minimal review by legal staff.\38\ We estimate that the 
average market participant will initially require four hours to 
register for an LEI and to collect, standardize, and provide the 
requested data to the RTO/ISO. We estimate the four hours of burden to 
cost $168 annually per market participant. (The cost of obtaining and 
maintaining the LEI is separate.)
---------------------------------------------------------------------------

    \38\ Using the average hourly cost of salary plus benefits 
provided above, the following weightings were applied to estimate 
the average hourly cost of $42.12: 95 percent information and record 
clerk, 5 percent legal.
---------------------------------------------------------------------------

    44. The proposed rule requires market participants to update and 
submit Connected Entity data after material changes and annually. We 
estimate that this ongoing burden will require less time than the 
initial collection but may occur more than once per year. We estimate 
three hours for each market participant to maintain their LEI 
registration and to collect, update, standardize, and transmit the 
requested data to the RTO/ISO. This burden would be largely 
administrative (95 percent) with some minimal review by legal staff (5 
percent). We estimate the total burden to be $126 per participant.
    45. Market participants or Connected Entities may, from time to 
time, seek to confirm the accuracy of information concerning them that 
has been submitted to an RTO/ISO by other market participants. We 
conservatively estimate that one-fourth of market participants and 
Connected Entities will seek to confirm such information. Such 
confirmations would be largely administrative (95 percent) with some 
minimal review by legal staff (5 percent). We estimate that these 
confirmations will take approximately one hour for an average burden of 
$42 per market participant or Connected Entity seeking confirmation. 
Connected entities may also respond to requests for information from 
market participants. We estimate that each Connected Entity will spend 
one hour responding to these requests. Such responses would be largely 
administrative (95 percent) with some minimal review by legal staff (5 
percent). We estimate that this activity will take approximately one 
hour for an average burden of $42 per Connected Entity.
    46. The following table summarizes the estimated burden and cost 
increases rounded to the nearest dollar in FERC-921, due to the 
proposed rule:
[GRAPHIC] [TIFF OMITTED] TP29SE15.000

    47. The table above contains estimates of the number of market 
participants and the number of Connected Entities per market 
participant. We estimate that there are 6,000 market participants in 
the RTO/ISO markets, based on an

[[Page 58389]]

analysis of data submitted by the RTOs/ISOs in accordance with Order 
No. 760. We estimate the number of Connected Entities to be an 
additional 9,000 companies, based on an analysis of data from Ventyx, a 
third party vendor which supplies ownership information about market 
participants.
    Information Collection Costs: We estimate the initial and ongoing 
cost of compliance with the NOPR's proposed requirements for each type 
of respondent as follows:

RTO/ISO

    [cir] Initial Burden: 358 hours, $29,480.
    [cir] Ongoing Burden (starting year one): 560 hours, $32,924.

Market Participant

    [cir] Initial Burden: 4 hours, $168 plus $250 to acquire LEI.
    [cir] Ongoing Burden (starting year two): 5 hours, $201, plus $150 
to maintain LEI.

Connected Entity

    [cir] Ongoing Burden (starting year one): 1.25 hours, $53.

    Title: FERC-921,\39\ Ongoing Electronic Delivery of RTO/ISO Data.
---------------------------------------------------------------------------

    \39\ OATT compliance filings (like the one-time compliance 
filing here) are normally included under FERC-516 (OMB Control No. 
1902-0096). However, the reporting requirements (including the 
compliance filing) contained in this proposed rule in Docket No. 
RM15-23-000 will be included in FERC-921.
---------------------------------------------------------------------------

    Action: Proposed revisions to existing information collection.
    OMB Control No.: 1902-0257.
    Respondents for this Rulemaking: RTOs and ISOs; market 
participants; Connected Entities.
    Frequency of Information: Initial implementation, compliance 
filing, and periodic updates (at least annually).
    48. Necessity of Information: As wholesale electricity markets 
continue to develop and evolve, new opportunities arise for anti-
competitive or manipulative behavior. The Commission's market 
monitoring and surveillance capabilities and associated data 
requirements must keep pace with market developments and evolve along 
with the markets. The data discussed in this NOPR will allow the 
Commission to more effectively identify and address such behavior; to 
identify ineffective market rules; to better inform Commission policies 
and regulations; and thus to help ensure just and reasonable rates.
    49. Internal Review: The Commission has made a preliminary 
determination that the proposed revisions are necessary to keep pace 
with ever-changing possibilities for anti-competitive or manipulative 
behavior and to better inform Commission policies and regulations, and 
thus to ensure that rates are just and reasonable. The Commission has 
assured itself, by means of its internal review, that there is 
specific, objective support for the burden estimate associated with the 
information requirements.
    50. Interested persons may obtain information on the reporting 
requirements by contacting the Federal Energy Regulatory Commission, 
Office of the Executive Director, 888 First Street NE., Washington, DC 
20426 [Attention: Ellen Brown, email: DataClearance@ferc.gov, phone: 
(202) 502-8663, fax: (202) 273-0873].
    51. Comments concerning the information collections proposed in 
this NOPR, and the associated burden estimates, should be sent to the 
Commission in this docket and may also be sent to the Office of 
Management and Budget, Office of Information and Regulatory Affairs, 
Washington, DC 20503 (Attention: Desk Officer for the Federal Energy 
Regulatory Commission). For security reasons, comments should be sent 
by email to OMB at the following email address: 
oira_submission@omb.eop.gov. Please reference FERC-921 and OMB Control 
No. 1902-0257 in your submission.

V. Environmental Analysis

    52. 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.\40\ The 
Commission has categorically excluded certain actions from these 
requirements as not having a significant effect on the human 
environment.\41\ The actions proposed here fall within a categorical 
exclusion in the Commission's regulations, i.e., they involve 
information gathering, analysis, and dissemination.\42\ Therefore, 
environmental analysis is unnecessary and has not been performed.
---------------------------------------------------------------------------

    \40\ Regulations Implementing the National Environmental Policy 
Act of 1969, Order No. 486, 52 FR 47897, FERC Stats. & Regs. ] 
30,783 (1987).
    \41\ 18 CFR 380.4 (2015).
    \42\ See 18 CFR 380.4(a)(5).
---------------------------------------------------------------------------

VI. Regulatory Flexibility Act

    53. The Regulatory Flexibility Act of 1980 (RFA) \43\ generally 
requires a description and analysis of proposed rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA mandates consideration of regulatory alternatives that 
accomplish the stated objectives of a rule and that minimize any 
significant economic impact on a substantial number of small entities. 
The Small Business Administration's (SBA) Office of Size Standards is 
responsible for the definition of a small business.\44\ These standards 
are provided on the SBA Web site.\45\ We reviewed the SBA's current 
size standards with respect to the three classes of entities covered in 
the proposed rule: RTOs/ISOs, market participants, and their Connected 
Entities.
---------------------------------------------------------------------------

    \43\ 5 U.S.C. 601-12.
    \44\ 13 CFR 121.101 (2015).
    \45\ U. S. Small Business Administration, Table of Small 
Business Size Standards Matched to North American Industry 
Classification System Codes (effective July 14, 2014), available at 
https://www.sba.gov/sites/default/files/Size_Standards_Table.pdf.
---------------------------------------------------------------------------

    54. The SBA classifies an entity as an electric utility if it is 
primarily engaged in the transmission, generation and/or distribution 
of electric energy for sale. Under this definition, RTOs/ISOs are 
considered electric utilities. The size criterion for a small electric 
utility is having 500 or fewer employees.\46\ Since every RTO and ISO 
has more than 500 employees, none are small entities.\47\
---------------------------------------------------------------------------

    \46\ 13 CFR 121.101 (Sector 22, Utilities). Of note, the SBA 
recently revised its size standard for electric utilities (effective 
January 22, 2014) from a standard based on megawatt hours to one 
based on the number of employees, including affiliates.
    \47\ For five of the RTOs/ISOs, full-time employee estimates are 
based on human resources reports published on the Web site of each 
RTO/ISO. For the sixth RTO/ISO, the full-time employee estimate was 
obtained from the Chief Financial Officer.
---------------------------------------------------------------------------

    55. Market participants and their Connected Entities are likely to 
be in several market sectors and therefore subject to a variety of SBA 
size standards. We have identified a broad cross-section of the most 
likely SBA market sectors for participants and their Connected 
Entities. Industries in these subsectors include utilities, oil and gas 
production, mining, finance, and leasing. Among these sectors, there 
are various criteria and thresholds for determining whether a business 
is small, but the numbers of employees do not exceed 1,000, and the 
revenues do not exceed $38.5 million.\48\
---------------------------------------------------------------------------

    \48\ 13 CFR 121.101.
---------------------------------------------------------------------------

    56. While many market participants and Connected Entities are some 
of the largest businesses in the United States (for example, large 
electric utilities and commercial banks), other market participants, 
such as individual power plants or small trading firms, would qualify 
as small under the SBA standards. It is difficult to estimate the size 
of all the entities affected by this proposed rule since many of 
smaller entities may be privately held with little public information 
available. However,

[[Page 58390]]

if every market participant and Connected Entity identified above were 
assumed to be small under SBA standards, a substantial number of small 
businesses, as many as 15,000, would be impacted by this proposed rule.
    57. The economic impact of this proposed rule is directly related 
to the complexity of the organization, that is, the more entities to 
which a company is related, the more information that must be reported. 
The data from Ventyx indicates that complexity of this type correlates 
with the organization's size: larger entities will have more reportable 
relationships than smaller ones. Therefore, it is reasonable to believe 
that the cost of complying for small entities will be significantly 
less than the cost for large ones. The analysis of connectedness based 
on Ventyx data suggests that, on average, each market participant has 
1.5 Connected Entities. However, this average likely overstates the 
number of connections for small entities since the analysis also found 
the median number of connections to be zero. This is also intuitively 
correct since concentrations of connections are typical only for large 
organizations.\49\ This analysis indicates that if an entity is truly 
small and its connections are related to its size, the number of 
Connected Entities that it would need to report is likely to be zero or 
one.
---------------------------------------------------------------------------

    \49\ In our analysis, the top 100 most connected market 
participants, almost all of which are not considered small, account 
for 20 percent of all relationships.
---------------------------------------------------------------------------

    58. Using these assumptions, we estimate that small businesses will 
be required to report few, if any, Connected Entity relationships. We 
estimate the initial burden for small companies to be $418 \50\ with an 
annual maintenance burden of $213.\51\ 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.'' \52\ Based on 
the above analysis, the reporting requirements proposed in this NOPR 
should not have a significant economic impact on a substantial number 
of small entities.
---------------------------------------------------------------------------

    \50\ This includes the initial LEI registration ($250) plus four 
hours of largely administrative work (95 percent) with some minimal 
review by legal staff (5 percent). ($168, at $42.12 per hour (salary 
plus benefits)).
    \51\ This includes annual LEI maintenance fee ($150) plus 1.5 
hours of largely administrative work (95 percent) with some minimal 
review by legal staff (5 percent) ($63 at $42.12 per hour (salary 
plus benefits)).
    \52\ U.S. Small Business Administration, A Guide for Government 
Agencies How to Comply with the Regulatory Flexibility Act, at 18 
(May 2012), available at https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf.
---------------------------------------------------------------------------

VII. Comment Procedures

    59. The Commission invites interested persons to submit comments on 
the matters and issues proposed in this notice to be adopted, including 
any related matters or alternative proposals that commenters may wish 
to discuss. Comments are due November 30, 2015. Comments must refer to 
Docket No. RM15-23-000, include the commenter's name, the organization 
they represent, if applicable, and their address in their comments.
    60. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software should 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.
    61. Commenters that are not able to file comments electronically 
must send an original of their comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    62. 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.

VIII. Document Availability

    63. 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) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, 
Washington DC 20426.
    64. 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, type 
the docket number excluding the last three digits of this document in 
the docket number field.
    65. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from the Commission's Online 
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202)502-8659. Email the Public Reference Room at 
public.referenceroom@ferc.gov.

List of Subjects in 18 CFR Part 35

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

    By direction of the Commission. Commissioner LaFleur is concurring 
with a separate statement attached.

    Dated: September 17, 2015.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

    In consideration of the foregoing, the Commission proposes to amend 
18 CFR part 35 to read 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.  35.28 by revising paragraph (g)(4) to read as follows:

Sec.  35.28  Non-discriminatory open access transmission tariff.

* * * * *
    (g) * * *
    (4) Electronic delivery of data. Each Commission-approved regional 
transmission organization and independent system operator must 
electronically deliver to the Commission, on an ongoing basis and in a 
form and manner acceptable to the Commission, data related to the 
markets that the regional transmission organization or independent 
system operator administers. The submittal shall include information 
concerning each market participant's Connected Entities, together with 
the Legal Entity Identifiers of the market participants and their 
Connected Entities (if known), as submitted to the regional 
transmission organization or independent system operator by the market 
participants. Connected Entity is defined as follows:
    (i) An entity that directly or indirectly owns, controls, or holds 
with power to vote, 10 percent or more of the ownership instruments of 
the market participant, including but not limited to voting and non-
voting stock and general and limited partnership shares; or an entity 
10 percent or more of whose ownership instruments are owned, 
controlled, or held with power to vote,

[[Page 58391]]

directly or indirectly, by a market participant; or an entity engaged 
in Commission-jurisdictional markets that is under common control with 
the market participant;
    (ii) The chief executive officer, chief financial officer, chief 
compliance officer, and the traders of a market participant (or 
employees who function in those roles, regardless of their titles);
    (iii) An entity that is the holder or issuer of a debt interest or 
structured transaction that gives it the right to share in the market 
participant's profitability, above a de minimus amount, or that is 
convertible to an ownership interest that, in connection with other 
ownership interests, gives the entity, directly or indirectly, 10 
percent or more of the ownership instruments of the market participant; 
or an entity 10 percent of more of whose ownership instruments could, 
with the conversion of debt or structured products and in combination 
with other ownership interests, be owned or controlled, directly or 
indirectly, by a market participant; or
    (iv) Entities that have entered into an agreement with the market 
participant that relates to the management of resources that 
participate in Commission-jurisdictional markets, or otherwise relates 
to operational or financial control of such resources, such as a 
tolling agreement, an energy management agreement, an asset management 
agreement, a fuel management agreement, an operating management 
agreement, an energy marketing agreement, or the like.
* * * * *

Appendix: Table Structures for Connected Entity Reporting

    The proposed rule requires RTOs and ISOs to submit tables 
identifying market participants by their Legal Entity Identifier 
(LEI), any RTO/ISO specific identifiers, and designated 
relationships between those market participants and their connected 
entities. The body of the proposed rule describes the relationships 
to be reported; this appendix suggests the structure of the tables 
that would be suitable for compliance.

Companies Table

    The first table will indicate in which markets each entity and 
Connected Entity (or entities) participates as well as any and all 
market identifiers used by those entities in each market. The 
columns of the table will contain at least the standard company 
name, LEIs, and market identifiers for all Connected Entities in a 
given submission. Each row will associate an LEI with a company 
name, market, and market identifier. In some cases, entities will 
trade using different market identifiers in the same market, in 
which case the entity will add a row for every market and for each 
unique market identifier used by that company. In the case where 
multiple entities are using the same market identifier, this can be 
indicated in a similar manner. If a Connected Entity does not 
participate in jurisdictional markets, then no market identifier is 
available and is not required.
    Here is a sample table indicating the cases described above

------------------------------------------------------------------------
                                                              Market
   Standard  company name           LEI         Market      identifier
------------------------------------------------------------------------
ACME Energy.................             001  MISO                328502
ACME Energy.................             001  PJM               00034253
ACME Energy.................             001  PJM               00098345
ACME Renewables.............             002  PJM               00034253
Smith Company...............             123  NYISO           3362000012
Johnson Inc.................             999  None                  None
------------------------------------------------------------------------

    [ssquf] Standard Company Name: The full name of the company 
which conforms in spelling and punctuation to all previous filings 
done by or on behalf of the same company.
    [ssquf] Legal Entity Identifier (LEI): The unique alpha-numeric 
identifier conforming to ISO 17442:2012 assigned to the legal 
entity.
    [ssquf] Market: Standard code for jurisdictional markets: PJM, 
NYISO, MISO, SPP, CAISO, ISONE, NON-RTO, None (i.e., does not 
participate in any electric markets).
    [ssquf] Market Identifier: Market identifiers are the alpha-
numeric codes used by markets to associate a market participant with 
their bids, offers, and settlements.

Connected Entities

    Connected Entities are those entities which are related to the 
reporting entity by (a) ownership or control, (b) key employees, (c) 
debt holders or issuers, or (d) contractual relationships. Since 
employee identification is significantly different from that of non-
person entities, a subtable for employee information is suggested 
and described below.

Employees

    The key employee positions to be included will be set forth in 
the RTOs/ISOs tariff, in conformity with the final adopted 
Commission regulation. The employee table will indicate the 
designated employees who are employed by each organization, their 
reportable roles, and the period of time they have held those 
positions. Persons employed by multiple entities will be indicated 
with multiple rows for different companies.
    Reportable roles that are jointly filled (e.g. Co-CEO) should be 
indicated as such (same company, same job but different employees). 
Employees who are no longer in reportable roles shall have at least 
one filing where the end date is not null. Employees changing 
reportable roles for a given company will appear twice in at least 
one filing (made in a timely manner): one row will indicate an end 
date for the employee/role and another row will contain a start date 
for a different reportable role. Individual employees filling 
multiple reportable roles will be indicated with multiple rows, one 
for each role.

--------------------------------------------------------------------------------------------------------------------------------------------------------
    Standard  company name            LEI           First name           Middle             Last              Role          Start date       End date
--------------------------------------------------------------------------------------------------------------------------------------------------------
ACME Energy...................             001  Jane.............  Doe..............  Smith...........  Trader..........      2010/01/01
ACME Energy...................             001  Jim..............  William..........  Jones...........  CEO.............      2009/01/03      2015/01/01
ACME Energy...................             001  Jim..............  William..........  Jones...........  Chairman........      2015/01/01
ACME Renewables...............             002  Aaron............  Jerome...........  Case............  CEO.............      2012/05/01
Smith Company.................             123  Xavier...........  Horatio..........  Martin..........  CEO.............      2007/01/01
Johnson Inc...................             999  Jane.............  Doe..............  Smith...........  CEO.............      2010/06/01
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The column definitions are self-explanatory.

Relationships

    The relationships table is intended to provide a map (or graph) 
to the remaining three types of Connected Entities of the market 
participant, which include both its corporate family as well as 
outside entities

[[Page 58392]]

connected by debt or contractual relationships. The relationships to 
be included are described in the body of the Notice of Proposed 
Rulemaking.

Relationship

    Relationships should be classified based on the broad categories 
defined above. Relationships may fall into the following general 
categories (omitting employees, category (b), who are reported in a 
separate subtable):

 owns (a)
 controls (a)
 has voting power (a)
 is under common control with (a)
 other ownership or control relationship with (a)
 owns debt of (c)
 owns convertible debt of (c)
 has a structured transaction with (c)
 other debt relationship with (c)
 has a management agreement with (d)
 has an operating agreement with (d)
 has a marketing agreement with (d)
 has a tolling agreement with (d)
 has a fuel management agreement with (d)
 other kind of agreement with (d).

    Contractual agreements between two parties regarding a third party 
should be entered as a multilateral relationship as described below.

Relationship Description

    Each table will include a field for the filing entity to summarize 
any pertinent relationship details which may not be captured in the 
standardized fields.

Simple Relationship Structures

    A relatively straightforward corporate family of three companies 
that all participate in MISO and PJM might be as follows:
[GRAPHIC] [TIFF OMITTED] TP29SE15.001

    If C owns A and C controls B, the entity and relationships tables 
would be reported as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                      Market
                      Standard company name                             LEI           Market        identifier
----------------------------------------------------------------------------------------------------------------
A...............................................................             001            MISO            0001
B...............................................................             002            MISO            0002
C...............................................................             003            MISO            0003
A...............................................................             001             PJM             ABC
B...............................................................             002             PJM             BCD
C...............................................................             003             PJM             DCE
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
                                                                                                   Relationship
            LEI 1                   LEI 2        Relationship      Start date       End date       description
----------------------------------------------------------------------------------------------------------------
003..........................             001  OWNS (a)........      2015/12/04  ..............  Wholly owned
                                                                                                  subsidiary.
003..........................             002  CONTROLS (a)....      2015/02/01  ..............  Exercises
                                                                                                  discretion
                                                                                                  over key
                                                                                                  market
                                                                                                  functions.
----------------------------------------------------------------------------------------------------------------

    In the event several Connected Entities are market participants in 
the same RTO or ISO, a combined filing of the structural relationships, 
but not the debt and contracts, could be made, disclosing on one form 
all of the connected entities. In such case, each Connected Entity must 
consent to the combined filing and verify the accuracy of the 
information.

More Complex Structures

    Relationships within the electric industry can be very complex. The 
illustrated method of reporting pairwise relationships based on LEIs 
extends to relationships of arbitrary complexity.
[GRAPHIC] [TIFF OMITTED] TP29SE15.002

------------------------------------------------------------------------
                  Standard company name                         LEI
------------------------------------------------------------------------
A.......................................................             001
B.......................................................             002
C.......................................................             003
D.......................................................             004
E.......................................................             005
F.......................................................             006
G.......................................................             007
H.......................................................             008
------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
                                                                                                   Relationship
            LEI 1                   LEI 2        Relationship      Start date       End date       description
----------------------------------------------------------------------------------------------------------------
003..........................             001  OWNS (a)........      2015/12/04  ..............  Wholly owned
                                                                                                  subsidiary.
003..........................             002  CONTROLS (a)....      2015/02/01  ..............  Exercises
                                                                                                  discretion
                                                                                                  over key
                                                                                                  market
                                                                                                  functions.
001..........................             002  HAS A TOLLING         2010/01/01      2020/01/01  1 will provide
                                                AGREEMENT WITH                                    raw materials
                                                (c).                                              to 2 under an
                                                                                                  agreement that
                                                                                                  2 will return
                                                                                                  electricity at
                                                                                                  a specified
                                                                                                  heat rate.
001..........................             004  OWNS (a)........      2011/05/02  ..............  Wholly-owned
                                                                                                  subsidiary.
001..........................             005  OWNS (a)........      2000/01/05  ..............  Wholly-owned
                                                                                                  subsidiary.

[[Page 58393]]

 
005..........................             006  HAS A FUEL            2005/01/01  ..............  Procures gas
                                                MANAGEMENT                                        and transport
                                                AGREEMENT WITH                                    on behalf of
                                                (d).                                              2.
006..........................             007  OWNS (a)........      2005/01/01  ..............  Wholly-owned
                                                                                                  subsidiary
006..........................             008  HAS AN ASSET          2001/10/01  ..............  Manages fleet
                                                MANAGEMENT                                        operations.
                                                AGREEMENT WITH
                                                (d).
004..........................             007  HAS AN ENERGY         2010/01/01      2015/01/01  Fee-based
                                                MARKETING                                         marketing
                                                AGREEMENT WITH                                    agreement of
                                                (d).                                              the energy
                                                                                                  produced by
                                                                                                  2's assets.
----------------------------------------------------------------------------------------------------------------

    The entity in the LEI 1 column is understood to be the entity on 
the left hand side of the relationship and the entity in the LEI 2 
column is understood to be the entity on the right hand side.

Multiple Relationships

    In some cases there may be multiple relationships between two 
market participants. Multiple relationships can be filed as follows:
[GRAPHIC] [TIFF OMITTED] TP29SE15.003

----------------------------------------------------------------------------------------------------------------
                     LEI 1                           LEI 2                Relationship             Other fields
----------------------------------------------------------------------------------------------------------------
001...........................................             002  OWNS............................  ..............
001...........................................             002  CONTROLS........................  ..............
----------------------------------------------------------------------------------------------------------------

Multilateral Relationships

    Multilateral relationships have three or more parties. Such 
relationships are reportable using a relationship identification field, 
as long as all pairwise relationships that are party to the 
relationship are reported and each multilateral relationship is 
assigned a unique relationship identifier. The relationship identifier 
will be assigned by the reporting entity, each reportable relationship 
will have a unique relationship identifier, the identifier will be a 
numeric sequence (i.e. no names, no punctuation, etc.), and when 
possible, relationship identifiers should be consistent between 
filings.
[GRAPHIC] [TIFF OMITTED] TP29SE15.004

----------------------------------------------------------------------------------------------------------------
                 LEI 1                       LEI 2            Relationship          Contract ID    Other fields
----------------------------------------------------------------------------------------------------------------
003...................................             002  CONTRACT................               1  ..............
003...................................             001  CONTRACT................               1  ..............
002...................................             001  CONTRACT................               1  ..............
----------------------------------------------------------------------------------------------------------------

    These fields can be used to report any number of participants, 
contracts, or relationships, regardless of complexity.
UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION
Collection of Connected Entity Data from Regional Transmission 
Organizations and Independent System Operators
(Issued September 17, 2015)
    LaFLEUR, Commissioner, concurring: Today's order proposes to amend 
the Commission's regulations by establishing a newly defined term, 
``Connected Entity,'' and to require the collection of information 
regarding Connected Entities, to allow the Commission to better monitor 
complex business relationships that could be utilized to engage in 
manipulative conduct in our jurisdictional markets. I support this 
proposal because it is important that the Commission, in accordance 
with our statutory mandate, have the tools to protect customers from 
manipulative behavior, and the collection of this information would 
assist the Commission with that effort.
    However, the Commission should always consider carefully whether 
the benefits offered by new compliance obligations outweigh the burdens 
that will be faced by market participants. I believe that the 
requirements in the Noticed of Proposed Rulemaking would create a 
significant new reporting regime for all market participants, as well 
as the RTOs and ISOs. I therefore encourage market participants to 
submit comments on today's proposed rulemaking that address the 
benefits of this proposed regulation, as well as the incremental costs 
or burdens that would be created by this new reporting requirement. I 
will carefully consider these issues as I decide whether to support the 
final rule.
    Accordingly, I respectfully concur.

Cheryl A. LaFleur,
Commissioner.
[FR Doc. 2015-24281 Filed 9-28-15; 8:45 am]
 BILLING CODE 6717-01-P