Document ID: FERC-2012-0719-0001
Agency: ferc
Document Type: Notice
Title: Acceptance of Updated Market Power Analysis: Vantage Wind Energy LLC
Posted Date: 2012-04-26T04:00Z

[Federal Register Volume 77, Number 81 (Thursday, April 26, 2012)]
[Notices]
[Pages 24941-24943]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-10085]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER10-956-003]

 Vantage Wind Energy LLC; Order Accepting Updated Market Power 
Analysis and Providing Direction on Submitting Studies

    Before Commissioners: Jon Wellinghoff, Chairman; Philip D. Moeller, 
John R. Norris, and Cheryl A. LaFleur.
    1. In this order, the Commission accepts an updated market power 
analysis filed by Vantage Wind Energy LLC (Vantage Wind). As discussed 
below, the Commission concludes that Vantage Wind continues to satisfy 
the Commission's standards for market-based rate authority. Vantage 
Wind's next updated market power analysis must be filed according to 
the regional schedule adopted in Order No. 697.\1\
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    \1\ Market-Based Rates for Wholesale Sales of Electric Energy, 
Capacity and Ancillary Services by Public Utilities, Order No. 697, 
FERC Stats. & Regs. ] 31,252, at PP 882-893, App. D, clarified, 121 
FERC ] 61,260 (2007), at PP 9-10, App. D-1, order on reh'g, Order 
No. 697-A, FERC Stats. & Regs. ] 31,268, at Apps. D, D-1, and D-2, 
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), at PP 47-48 (amending in part 
App. D-2), order on reh'g, Order No. 697-D, FERC Stats. & Regs. ] 
31,305 (2010), aff'd sub nom. Montana Consumer Counsel v. FERC, 659 
F.3d 910 (9th Cir. 2011).
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    2. Additionally in this order, the Commission provides further 
direction on the performance of the indicative screens. In the future, 
when filing updated market power analyses with the Commission, filers 
that are load-serving entities should account for their remote 
generation and long-term firm purchases as described below.\2\
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    \2\ Load-serving entities use transmission facilities owned and 
maintained by a transmission owner to secure energy and transmission 
service to serve the electrical demand and energy requirements of 
their end-use customers.
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Background

    3. On December 20, 2010, Vantage Wind filed an updated market power 
analysis in compliance with the regional reporting schedule adopted in 
Order No. 697 and pursuant to the Commission's order granting Vantage 
Wind authority to sell electric energy, capacity, and ancillary 
services at market-based rates.\3\ In performing the indicative 
screens, Vantage Wind states that it relied on the updated market power 
analysis filed by Puget Sound Energy, Inc. (Puget).\4\
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    \3\ See Vantage Wind Energy LLC, Docket No. ER10-956-000 (May 
26, 2010) (delegated letter order).
    \4\ See Puget Sound Energy, Inc. Filing, Docket No. ER99-845-020 
(filed Jun. 29, 2010).
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    4. Vantage Wind owns and operates 90 megawatts (MW) of wind-powered 
generation facilities located near Kittias County, Washington.
    5. Vantage Wind is an indirect, wholly-owned subsidiary of Vantage 
Wind Holdings LLC (Vantage Holdings). Vantage Wind states that Vantage 
Class B Holdings LLC (VCB Holdings), an indirect, wholly-owned 
subsidiary of Invenergy Investment Company LLC (Invenergy Investment), 
owns the Class B membership interests in Vantage Holdings and is the 
managing member. Vantage Wind states that Mehetia, Inc. (Mehetia) owns 
the Class A membership interests in Vantage Holdings. Vantage Wind 
represents that the Class A membership interests held by Mehetia are 
passive interests, consistent with the interests found to be passive in 
AES Creative Resources, L.P.\5\
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    \5\ 129 FERC ] 61,239 (2009).
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    6. Invenergy Investment is a wholly-owned subsidiary of Polsky 
Energy Investments LLC, which is indirectly owned and controlled by an 
individual. Vantage Wind states that through subsidiaries, Invenergy 
Investment is in the business of acquiring or developing, and owning 
and operating, electric generation facilities and associated 
interconnecting transmission facilities in the United States or abroad.
    7. Vantage Wind states that other than their interests in Vantage 
Wind, none of Polsky Energy or Invenergy Investment and their 
respective affiliates own or control electric generation or 
transmission assets located within the Puget balancing authority area. 
Invenergy Investment indirectly owns controlling interests in two 
companies that own generation in the Bonneville Power Administration 
balancing authority area, which is first-tier to the Puget balancing 
authority area. The two companies are Grays Harbor Energy LLC, which 
owns a 650 MW gas-fired generation facility, and Willow Creek Energy 
LLC, which owns a 72 MW wind-powered generation facility. Vantage Wind 
states that this generation is accounted for in its market power 
analysis.
    8. On June 17, 2011, the Commission issued an order accepting 
simultaneous transmission import limit (SIL) values for the Northwest 
region, including the Puget balancing authority area.\6\ In accepting 
Puget's SIL values, Commission staff adjusted Puget's SIL values to 
account for long-term firm transmission reservations by using data 
reported by Puget to derive a ``net'' SIL value for the Puget balancing 
authority area. This ``net'' SIL value is the accepted SIL value for 
that balancing authority area as set forth in the NW SIL Order.\7\ 
Puget's screens, however, used the higher, ``gross'' SIL values 
originally filed by Puget.\8\ Additionally, Puget reported all of its 
remote generation resources and firm power purchases that Puget 
controls, as non-firm imports (Line D of the pivotal supplier screen 
and Line E of the market share screen).\9\
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    \6\ Puget Sound Energy, Inc., 135 FERC ] 61,254 (2011) (NW SIL 
Order).
    \7\ See NW SIL Order, 135 FERC ] 61,254 at Appendix A.
    \8\ We note that Puget accounted for these resources as part of 
its imports, which artificially increased the SIL values reported in 
Puget's screens. Commission staff did not ask Puget to amend their 
screens, because Puget is a net purchaser and passes the screens in 
its balancing authority area irrespective of whether one applies the 
accepted net SIL values or the gross SIL values used by Puget.
    \9\ Specifically, we refer to Puget's Colstrip plant located in 
Montana and its firm power purchase agreements from Bonneville. This 
reporting by Puget did not affect Puget's screen results.
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    9. In Vantage Wind's December 20, 2010 Filing, Vantage Wind filed 
screens that utilized the ``gross'' SIL values that Puget used in its 
screens. Thus, Vantage Wind needed to revise its indicative screens so 
that its total imports are consistent with the Commission's accepted 
SIL values for the Puget balancing authority area.
    10. On August 8, 2011, Vantage Wind filed revised pivotal supplier 
and wholesale share market screens as an amendment to its updated 
market power analysis to demonstrate that it continues to pass the 
indicative screens when the Commission-accepted SIL values for the 
Puget balancing authority area are applied.

Notices and Responsive Pleadings

    11. Notice of Vantage Wind's December 20, 2010 and August 8, 2011 
filings were published in the Federal Register, 75 FR 81,600 (2010) and 
77 FR 2518 (2012), with interventions or protests due on or before 
February 18, 2011 and January 31, 2012. None was filed.

Discussion

Market-Based Rate Authorization

    12. The Commission allows power sales at market-based rates if the 
seller and its affiliates do not have, or have adequately mitigated, 
horizontal and vertical market power.\10\ As discussed

[[Page 24942]]

below, we find that Vantage Wind satisfies the Commission's standards 
for market-based rate authority.
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    \10\ Order No. 697, FERC Stats. & Regs. ] 31,252, at PP 62, 399, 
408, 440.
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1. Horizontal Market Power
    13. The Commission has adopted two indicative screens for assessing 
horizontal market power: the pivotal supplier screen and the wholesale 
market share screen.\11\ The Commission has stated that passage of both 
screens establishes a rebuttable presumption that the applicant does 
not possess horizontal market power, while failure of either screen 
creates a rebuttable presumption that the applicant has horizontal 
market power.\12\
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    \11\ Id. P 62.
    \12\ Id. PP 33, 62-63.
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    14. The Commission explained in Order No. 697 that in performing 
the indicative screens, uncommitted capacity is calculated by adding 
the total nameplate or seasonal capacity of generation owned or 
controlled through contract and firm purchases, less operating 
reserves, native load commitments and long-term firm sales.\13\ The 
Commission further explained that uncommitted capacity from a seller's 
remote generation \14\ should be included in the seller's total 
uncommitted amounts.\15\
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    \13\ Id. P 38.
    \14\ Remote generation refers to any generation capacity owned 
by a load-serving entity that is located outside of the load-serving 
entity's balancing authority area.
    \15\ Order No. 697, FERC Stats. & Regs. ] 31,252, at P 38.
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    15. Vantage Wind performed indicative screen analyses for the Puget 
balancing authority area. Vantage Wind states that it relied on the 
updated market power analysis filed by Puget to demonstrate that 
Vantage Wind passes the pivotal supplier screen and the wholesale 
market share screen in the Northwest region.\16\
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    \16\ Puget's updated market power analysis was accepted on June 
23, 2011. See Puget Sound Energy, Inc., Docket No. ER99-845-020 
(Jun. 23, 2011) (delegated letter order).
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    16. In its updated market power analysis, Puget accounted for both 
its remote generation from its Colstrip plant located in Montana and 
its firm power purchase agreements from Bonneville as Imported Power 
(Line D of the market share screen and the pivotal supplier screen) 
rather than as Installed Capacity (Line A of the market share screen 
and the pivotal supplier screen) or a Long-term Firm Purchase (Line B 
of the market share screen and the pivotal supplier screen), 
respectively. Consequently, the total SIL shown in Puget's screens 
exceeded the net SIL value for the Puget balancing authority area as 
accepted by the Commission in the NW SIL Order. When Vantage Wind 
applied the Commission-approved SIL values to its analysis without 
making any other adjustments to Puget's screens, Vantage Wind appeared 
to fail the screens because Puget's capacity was underreported. In 
applying the Commission accepted SIL values, Vantage Wind effectively 
under-reported Puget's capacity because some of Puget's capacity was no 
longer reflected as imports due to the reduced SIL values. Further, 
when Vantage Wind accounted for Puget's remote generation resources as 
non-affiliate imports, Vantage Wind's resulting SIL values did not 
match the ``net'' SIL for the Puget balancing authority area that the 
Commission accepted in the NW SIL Order.
    17. Thus, although Puget's incorrect allocation of both its remote 
generation and its firm power purchase agreements as Imported Power did 
not affect its screen results, it resulted in screen failures for a 
non-affiliate within the same region.
    18. Vantage Wind states that in its revised indicative screens, it 
adjusted the amounts identified as Puget-controlled resources located 
outside the Puget system. Vantage Wind states that instead of including 
these amounts as a component of unaffiliated import capacity, it is 
reporting these amounts as non-affiliate Long-Term Firm Purchases (Line 
M of the market share screen and Line F of the pivotal supplier screen) 
in its revised indicative screens.
    19. The Commission has reviewed Vantage Wind's revised pivotal 
supplier and wholesale market share screens for the Puget balancing 
authority area, as revised by Vantage Wind to account for the proper 
treatment of remote generation and Long-term Firm Purchases. 
Specifically, Vantage Wind accounts for Puget's remote generation as 
non-affiliated Long-term Firm Purchases (Line M of the market share 
screen and Line F of the pivotal supplier screen) in its revised 
indicative screens. We find that Vantage Wind passes the pivotal 
supplier screen and the wholesale market share screen in the Puget 
balancing authority area with market shares ranging from 8.6 to 15 
percent across the four seasons.
    20. Accordingly, we find that Vantage Wind satisfies the 
Commission's requirements for market-based rates regarding horizontal 
market power.
    21. However, to prevent underreporting of load-serving entities' 
capacity in future updated market power analyses, and thereby affecting 
the screen results for non-affiliates within the same region, the 
Commission provides direction on how load-serving entities filing 
market power studies should account for both remote generation 
resources and long-term firm power purchases from generation resources 
located outside their home balancing authority area when performing the 
indicative screens. Specifically, load-serving entities should add 
their share of remote generation to Installed Capacity (Line A of the 
market share screen and the pivotal market share screen) and the amount 
of any long-term firm purchases into Long-term Firm Purchases (Line B 
of the market share screen and the pivotal supplier screen) of the 
indicative screens, when load-serving entities have long-term firm 
transmission rights associated with these resources. Load-serving 
entities should not include these amounts in Imported Power (Line D of 
the market share screen and the pivotal supplier screen) unless these 
resources do not have long-term firm reservations or rights to import 
that power.
2. Vertical Market Power
    22. In cases where a public utility, or any of its affiliates, 
owns, operates, or controls transmission facilities, the Commission 
requires that there be a Commission-approved open access transmission 
tariff (OATT) on file or that the seller has received waiver of the 
OATT requirement before granting a seller market-based rate 
authorization.\17\ Such waivers can be relied upon to satisfy the lack 
of transmission market power prong of the market-based rate 
criteria.\18\ If a seller that previously received waiver of the OATT 
requirement seeks to continue to rely on that waiver to satisfy the 
vertical market power part of the analysis, it must make an affirmative 
statement that it previously received such a waiver, that such waiver 
remains appropriate, and the basis for that claim.\19\
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    \17\ Order No. 697, FERC Stats. & Regs. ] 31,252 at P 408.
    \18\ Id.
    \19\ Id.
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    23. Vantage Wind states that it does not own or control 
transmission facilities, other than the limited interconnection 
facilities that it owns as part of its generation project to deliver 
its power to its power purchasers. Vantage Wind further states that 
none of Polsky Energy, Invenergy Investment or their affiliates own or 
control transmission facilities in the United States other than limited 
interconnection facilities that Invenergy Investment's exempt wholesale 
generator subsidiaries (i) use to transmit their power from generation 
facilities that they own to their respective power

[[Page 24943]]

purchasers or (ii) permit third parties to use but because of the 
discrete nature of such interconnection facilities have received 
waivers from the Commission of open access transmission 
requirements.\20\ Vantage Wind represents that such waivers remain 
appropriate because the facts and circumstances upon which they were 
originally granted have not changed.
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    \20\ Vantage Wind December 20 Filing at 10 (citing Grand Ridge 
Energy, LLC, 128 FERC ] 61,134 (2009), Hardee Power Partners 
Limited, 125 FERC ] 61,036 (2008), Wolverine Creek Goshen 
Interconnection, LLC, Docket No. ER06-267-000 (Jan. 13, 2006) 
(delegated letter order); Hardee Power Partners Limited, 114 FERC ] 
61,131 (2006)).
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    24. The Commission also considers a seller's ability to erect other 
barriers to entry as part of the vertical market power analysis.\21\ 
The Commission requires a seller to provide a description of its 
ownership or control of, or affiliation with an entity that owns or 
controls, intrastate natural gas transportation, storage or 
distribution facilities; sites for generation capacity development; and 
physical coal supply sources and ownership of or control over who may 
access transportation of coal supplies (collectively, inputs to 
electric power production).\22\ The Commission also requires sellers to 
make an affirmative statement that they have not erected barriers to 
entry into the relevant market and will not erect barriers to entry 
into the relevant market.\23\ The Commission adopted a rebuttable 
presumption that the ownership or control of, or affiliation with any 
entity that owns or controls, inputs to electric power production does 
not allow a seller to raise entry barriers but will allow intervenors 
to demonstrate otherwise.\24\
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    \21\ Order No. 697, FERC Stats. & Regs. ] 31,252 at P 440.
    \22\ Id. P 447; Order No. 697-A, FERC Stats. & Regs. ] 31,268 at 
P 176.
    \23\ Order No. 697, FERC Stats. & Regs. ] 31,252 at P 447.
    \24\ Id. P 446.
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    25. With regard to other barriers to entry, Vantage Wind states 
that it does not, nor does Invenergy Investment, Polsky Energy or their 
affiliates, own or control in the United States: (i) Intrastate natural 
gas transportation, storage or distribution facilities or companies 
that own or control such facilities, or (ii) coal resources or 
transportation facilities or companies that own or control such things. 
Moreover, Vantage Wind states that it and its affiliates do not own or 
control sites located within the Puget balancing authority area that 
could be used to impose barriers to market entry by other wholesale 
power suppliers. Vantage Wind states that it owns or has land rights to 
the site for its generation facilities and that other affiliates of 
Invenergy Investment own, or may acquire in the future, certain 
property rights in land for the potential development of generation in 
places within in the United States including the Puget balancing 
authority area.
    26. Finally, consistent with Order No. 697, Vantage Wind 
affirmatively states that it and its affiliates have not erected 
barriers to entry and will not erect barriers to entry in the relevant 
geographic market.
    27. Based on Vantage Wind's representations, we find that Vantage 
Wind satisfies the Commission's requirements for market-based rate 
authority regarding vertical market power.

B. Reporting Requirements

    28. Consistent with the procedures that the Commission adopted in 
Order No. 2001, an entity with market-based rates must electronically 
file an Electric Quarterly Report (EQR) with the Commission containing: 
(1) A summary of the contractual terms and conditions in every 
effective service agreement for market-based power sales; and (2) 
transaction information for effective short-term (less than one year) 
and long-term (one year or longer) market-based power sales during the 
most recent calendar quarter.\25\ Public utilities must file EQRs no 
later than 30 days after the end of the reporting quarter.\26\
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    \25\ Revised Public Utility Filing Requirements, Order No. 2001, 
FERC Stats. & Regs. ] 31,127, reh'g denied, Order No. 2001-A, 100 
FERC ] 61,074, reh'g denied, Order No. 2001-B, 100 FERC ] 61,342, 
order directing filing, Order No. 2001-C, 101 FERC ] 61,314 (2002), 
order directing filing, Order No. 2001-D, 102 FERC ] 61,334 (2003). 
Attachments B and C of Order No. 2001 describe the required data 
sets for contractual and transaction information. Public utilities 
must submit EQRs to the Commission using the EQR Submission System 
Software, which may be downloaded from the Commission's Web site at 
http://www.ferc.gov/docs-filing/eqr.asp.
    \26\ The exact filing dates for these reports are prescribed in 
18 CFR 35.10b (2011). Failure to file an EQR (without an appropriate 
request for extension), or failure to report an agreement in an EQR, 
may result in forfeiture of market-based rate authority, requiring 
filing of a new application for market-based rate authority if the 
applicant wishes to resume making sales at market-based rates.
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    29. Additionally, Vantage Wind must timely report to the Commission 
any change in status that would reflect a departure from the 
characteristics the Commission relied upon in granting market-based 
rate authority.\27\
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    \27\ Reporting Requirement for Changes in Status for Public 
Utilities with Market-Based Rate Authority, Order No. 652, FERC 
Stats. & Regs. ] 31,175, order on reh'g, 111 FERC ] 61,413 (2005); 
18 CFR 35.42(a) (2011).
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    30. Vantage Wind must also file updated market power analyses for 
all regions in which it is designated as a Category 2 seller in 
compliance with the regional reporting schedule adopted in Order No. 
697.\28\ The Commission reserves the right to require an updated market 
power analysis at any time.\29\
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    \28\ Order No. 697, FERC Stats. & Regs. ] 31,252 at P 882. See 
Vantage Wind Energy, LLC, Docket No. ER10-956-000, at 2 (May 26, 
2010) (delegated letter order).
    \29\ Id. P 853.
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    The Commission orders:
    (A) Vantage Wind's updated market power analysis is hereby accepted 
for filing, as discussed in the body of this order.
    (B) Vantage Wind is hereby directed to file an updated market 
analysis for all regions in which it is designated as a Category 2 
seller in compliance with the regional reporting schedule adopted in 
Order No. 697.
    (C) The Secretary is hereby directed to publish a copy of this 
order in the Federal Register.

    Issued April 23, 2012.

    By the Commission.
 Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2012-10085 Filed 4-25-12; 8:45 am]
BILLING CODE 6717-01-P