United States: FERC Revokes MBR Authorization Of 26 Suppliers For Delinquent EQRs

Last Updated: November 6 2014
Article by Terence T. Healey, Kenneth W. Irvin and Katherine Vorhis

Most Read Contributor in United States, December 2018

On October 30, 2014, the Federal Energy Commission issued an order revoking the market-based rate ("MBR") authorization of twenty-six (26) retail suppliers for failure to timely file Electric Quarterly Reports ("EQRs").1The FERC had notified these suppliers on October 9, 2014, along with seventeen other entities, that their MBR authority would be revoked unless the sellers filed all delinquent EQRs within fifteen days.2 FERC did not revoke MBR authorization from the other entities that received a delinquency notice on October 9 but have since filed either missing EQRs or requested additional time.

FERC's order comports with market participants' expectations of increased regulatory focus on the EQR filing process. FERC recently revised its EQR filing system with the implementation of a new web-based filing platform, which went live on April 1, 2014. As staff continues to implement and review the new system for errors, FERC may be giving increased attention, including through audits, to retail sellers' previous EQR filings and whether entities are in compliance with FERC requirements.

FERC's Revisions to the EQR Filing Process

Under Order Nos. 768, 768A, and 770, FERC revised its process to require public utilities and non-public utilities above a de minimis threshold to make publicly available all rates, terms, and conditions of jurisdictional service by filing quarterly reports with the Commission over an updated electronic platform. To accommodate the new filing requirements as well as recent advances in technology, FERC staff developed a new platform through which sellers can file EQRs or submit Extensible Mark-up Language ("XML") data. The FERC's new filing process applies to EQRs due for the third quarter of 2013 onward.

Since the EQR System went live on April 1, 2014, FERC staff have offered various resources to market participants to assist their compliance with the new EQR filing process. Staff led a demonstration on using the new filing system at the FERC Technical Conference on Revisions to the EQR Filing Process, held on March 26, 2014. An archived webcast of the conference is available on the FERC website, in addition to updated Release Notes, system guidelines, and a Staff Alert describing common errors that FERC has seen in EQR submissions from market participants. In these various communications to market participants, FERC frequently calls attention to the requirement that a seller maintain at least one eRegistered contact in order to properly file EQRs. If a submitter is not properly registered and designated, the file will not be accepted for filing until the error is corrected.

Consequences of Inaccurate and Delinquent EQRs

FERC's Office of Enforcement monitors EQR submissions through its Division of Energy Market Oversight ("Market Oversight") and Division of Audits and Accounting ("DAA"). Each fiscal year, Market Oversight staff review EQR submissions to determine whether sellers have complied with the filing requirements and whether information submitted is accurate and reliable. Enforcement staff from the DAA, on the other hand, complete financial and operational audits of certain market participants each year, which include audits of companies' EQR filings. When Enforcement staff from Market Oversight or the DAA identify inaccuracies in EQR filings, they typically contact market participants and request corrected reports, even though staff is not required to do so.3 Additionally, staff will offer recommendations to improve internal controls processes and ensure compliance with FERC EQR filing requirements.

But while a misfiled or inaccurate EQR often only results in a request for re-filing, the failure to timely file EQRs may subject a company to civil penalties or revocation of MBR authorization.4 When FERC staff identifies a retail seller that is delinquent with its EQR filings, FERC will often publicly issue a delinquency notice to the retail provider, giving the entity a certain period of days to come into compliance with FERC regulations. As recent events show, such a notice is not an empty threat. If a seller does not file its delinquent EQRs or request an extension, FERC will revoke the entity's MBR authorization.

Finally, because FERC Enforcement already monitors EQR submissions, inaccurate or delinquent EQR filings may attract Enforcement's attention to additional compliance concerns. For example, in one 2013 case before the Commission, Enforcement staff identified about 1,300 misreported transactions in EQR filings, several of which were unauthorized energy transactions at market-based rates.5 Even though Enforcement staff concluded the violations were due to a lack of adequate training, the Commission still assessed an $80,000 civil penalty and almost $6,000 worth of refunds with interest.6 Thus, as FERC Enforcement continues to implement and monitor its new EQR filing process, market participants should closely review their EQR filings to ensure accuracy and compliance with FERC requirements.

Footnotes

[1] Notice of Revocation of Market-Based Rate Tariff, Docket No. ER02-2001-018 (2014) (October 30 Order).

[2] Electric Quarterly Reports, 149 FERC ¶ 61,023 (2014) (October 9 Order).

[3] See Staff of the Office of Enforcement, FERC, 2013 Report on Enforcement, Docket No. AD07-13-006, at 49 (2013) (describing the Market Oversight staff's FY2013 compliance review of EQR filings); see also Letter order approving Public Service Enterprise Group Inc.'s Audit Report, Docket No. PA13-13-000 (Oct. 16, 2014) (recommending that PSEG Companies re-file EQR reports and implement new internal controls processes).

[4] See Revised Public Utility Filing Requirements, Order No. 2001,FERC Stats. & Regs.¶ 31,127 at P 222-23, 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, order refining filing requirements,Order No. 2001-E, 105 FERC ¶ 61,352 (2003), order on clarification, Order No. 2001-F, 106 FERC ¶ 61,060 (2004), order revising filing requirements, Order No. 2001-G, 120 FERC ¶ 61,270, order on reh'g and clarification, Order No. 2001-H, 121 FERC ¶ 61,289 (2007), order revising filing requirements, Order No. 2001-I, FERC Stats. & Regs. ¶ 31,282 (2008).

[5] In re Progress Energy Florida, Inc., 142 FERC ¶ 61,041 at P 9 (2013).

[6] Id. at P 1.

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