Electric Power
Market-Based Rates

The Brattle Group provides expert testimony and economic analysis involving sellers’ requests before the U.S. Federal Energy Regulatory Commission (FERC) for authority to sell at market-based rates (MBR) in the wholesale electricity markets.

We assist utilities and independent power producers in their triennial market-based rates and changes in status compliance filings, including performing the FERC’s two indicative screen analyses (Pivotal Supplier and Market Share Screens) and preparing supporting affidavits. We see our role as not simply performing the required FERC analyses, but also supplying economic reasons to support the underlying FERC requirements and key assumptions and to facilitate the process by working collaboratively with our clients. For example, we have worked with our client’s transmission team in preparing simultaneous import limits (SILs) that are required by FERC in order to determine proper relevant market and product definitions. Our SIL studies have also been accepted by the FERC for the California ISO and New York ISO markets.

Our knowledge and experience also allows us to aid clients in identifying whether a mitigation measure is needed. We have utilized our in-house Delivered Price Test (DPT) model to rebut the presumption of market power and to recommend appropriate mitigation measures.

We have applied MBR analyses for clients in a variety of settings, including potential mergers and acquisitions, and in several geographic regions, including New York, New England, the Mid Atlantic, the Midwest, Florida, the Southeast, and the Western U.S.

Recent Development in FERC’s MBR Policies and Procedures
On June 19, 2014, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking on Refinements to Policies and Procedures for Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities (NOPR). The NOPR proposes a number of changes to the MBR procedures. Overall, the NOPR will reduce sellers’ filing burdens as it proposes to: (1) eliminate indicative screen requirement for RTO sellers; and (2) eliminate land acquisition reporting requirement.

The NOPR also proposes additional guidelines on some issues arisen when performing the two indicative screens. Examples of these issues that the NOPR clarifies are:

  • Assumptions, methodology, and data used in conducting SIL studies;
  • When to eliminate the two indicative screen analyses for sellers with fully-committed resources;
  • Calculation of availability factors for renewable resources; and
  • Inclusion of long-term firm purchase contracts.

Among the key proposals highlighted in the summary is that the inclusion of all long-term firm purchase contracts will need to be carefully considered. FERC proposes that regardless of whether MBR applicants have control over resources served under their long-term purchase contracts, the MBR applicants must report all of their long-term firm purchases of capacity and/or energy (long-term is defined as one year or longer based on the EQR definition) in their:

  • Asset appendix (Appendix B)
  • Two indicative screens
  • Change In Status’ 100 MW threshold

This appears to be in reverse of its decision in Integrys (2008). In Integrys, FERC found that the Firm LD contracts, as defined in the EEI Master Agreement with a specified liquidated damages payment, do not confer control to the buyer. The FERC therefore did not require MBR sellers to report the purchases in a CIS filing or in the indicative screen analyses.

A summary of the NOPR can be found here.

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Dr. Arthur has more than 15 years of consulting and litigation experience in the natural gas, natural gas liquids, and petroleum industries. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Broehm 076
Dr. Broehm is an economic expert in the electric utility industry specializing in the areas of market competition, impacts of regulatory policies on wholesale power markets and power assets and valuation, and the evaluation of power procurement. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Metin 087
Dr. Metin Celebi provides expertise in electricity markets and analysis of environmental and climate policy. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Hanser 080
Mr. Hanser assists clients in issues ranging from utility industry structure and market power and associated regulatory questions, to specific operational and strategic issues, such as transmission pricing, generation planning, and tariff strategies. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Academic Advisors
Fox penner 131
Academic Advisor
Dr. Fox-Penner specializes in economic, regulatory, and strategic issues in network industries. His practice centers on energy and environmental policies and electric regulation, planning, and competition issues. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Technology's Role, Rates and Customers, 1985-2016
August 16, 2016
Presented at the Wisconsin Public Utility Institute
FERC's Market Manipulation Rule: Impact on FTRs and the Virtual Market
March 8, 2016
Presented at the Energy Bar Association Midwest Chapter Annual Meeting
Comments of Dr. Romkaew Broehm and Mr. Gerald A. Taylor to the Federal Energy Regulatory Commission Regarding Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities (Docket No. RM14-14-000)
September 2014
Prepared for the Federal Energy Regulatory Commission
Summary of Proposed Refinements to Market-Based Rates Policies & Procedures
June 2014
Romkaew P. Broehm and Richard Sweet
Published by The Brattle Group, Inc., in response to Notice of Proposed Rule Making (Docket No. RM14-14)
Is It Possible to Charge Market-Based Pricing for Ancillary Services in a Non-ISO Market? Regulation and Operating Reserves
May 16, 2014
Presented at the Center for Research in Regulated Industries 33rd Eastern Conference