FERC Filings
INFORMATION DISCLOSURE COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION
I.
The Commission Should Protect Competitively Sensitive Information
In the final rule, the Commission should protect the disclosure of commercially sensitive information. Clearly, such disclosure is not required to satisfy the requirements of Section 205 of the Federal Power Act, which covers the filing of rate schedules, not transactional data. Indeed, the Court of Appeals recently affirmed in Power Company of America , the Commission’s long held view that it has the discretion to determine what information is required to be on file, and made public or remain confidential, under Section 205(c) of the Federal Power Act and Section 35.15 of the Commission’s regulations. The Commission has exercised that discretion most often in the context of a market-based sales environment, such as currently exists in the electric industry.
It is clear Commission has discretion under Section 205(c) of the Federal Power Act and the companion provision Section 4 of the Natural Gas Act. In the past, as the Commission has nurtured the development of competitive markets for sales of natural gas similar to its development of competitive markets for electricity, the Commission has utilized the trade secrets exemption of the Freedom of Information Act to ensure that commercially sensitive information was not disclosed in a competitive market. In so acting, the Commission has found such disclosure would harm not only the sellers providing the information, but in the end, the competitive market the Commission is attempting to foster.
The most recent example can be found in the Commission’s decision in Docket No. RM01-9-000, Reporting of Natural Gas Sales to the California Market. There, the Commission originally proposed to require the public disclosure of contract information on each natural gas sale, and contract information on each gas purchase contract associated with those sales, as well as a separate identification of the transportation component and the gas commodity component in sales contracts. Not surprisingly the Indicated Shippers, which both produce and market natural gas in the competitive natural gas market, argued that such information “was highly confidential and its disclosure would result in competitive injury” citing, in support, a long line of Court opinions. The Commission agreed citing Continental Oil v. FERC and finding such information falls under FOIA Exemption No. 4 as “trade secrets and commercial or financial information obtained from a person and privileged or confidential”. The Commission said:
In Order No. 636, the Commission held that, with the regulatory changes there ordered, the market for the sale of the gas commodity would be competitive. The gas purchase and supply data the Commission is requesting, if disclosed to the public, would significantly disadvantage the competitive position of the gas sellers supplying that information. Gas sellers compete not only with each other, but also with other marketers. Competitive injury would thus occur with regard to the gas seller’s relationships with its customers. In addition, disclosure could make apparent various proprietary marketing strategies and trade secrets, including how sales transactions are structured. In the highly competitive gas supply environment, such disclosure could cause competitive injury. The information furnished is entitled to protection from public disclosure if there is a “likelihood” of competitive injury - there need not be a showing of actual competitive “harm.” The individual sales transactions are proprietary, not only from the perspective of the seller, but also from the buying entity’s perspective. For example, the data could show the prices that a particular gas purchaser is willing to pay.
Fundamentally, competitive sellers of electric energy have the same concerns, and thus should be treated no differently than competitive sellers of natural gas in today’s energy markets.
Yet, by applying an Index of Customers applicable to transportation transactions on the natural gas side to competitive commodity transactions on the electric side, the Commission will be treating competitive electric sellers differently in terms of the reporting that is disclosed. The Index of Customers used by interstate natural gas pipelines provides data regarding transportation of natural gas and identifies service agreements and related quantities at delivery points. This is similar to electric transmission service that remains subject to cost of service regulation because both the markets for gas transportation and electric transmission lack competitive alternatives. It is not data about actual natural gas commodity sales, the pricing for which solely reflects the operation of market forces, not Commission regulation, as a result of Congressional and Commission action finding those markets competitive. In fact, as the Natural Gas Reporting Requirements Rule shows, the same commodity data the Commission is proposing to make public in this NOPR was actually kept confidential with respect to gas transactions.
No doubt, in the Natural Gas Reporting Requirements Rule, the Commission’s decision was influenced by the fact that many of the sales in question were not subject to the Commission’s jurisdiction under the Natural Gas Act. The Commission was quick to add, however:
…the Commission does not wish to impose more burdensome requirements on jurisdictional sellers with whom they compete.
Similarly, on the electric side, as the Commission is well aware, there are significant market participants that are not public utilities under the Federal Power Act. As such, these entities will not be subject to the same filing requirements that public utilities will be subject to and thus these entities will have access to information that their competitors, i.e. public utilities under the jurisdiction of the Commission, will not be able to access. This will place jurisdictional sellers at a competitive disadvantage to non-jurisdictional sellers, though both sell into the same competitive market.
EPSA is not proposing that that the Commission not be provided with the information it deems sufficient to monitor transactions under its jurisdiction. It simply does not want its non-jurisdictional competitors to have access to that information and thus confidentiality of commercially sensitive data must be maintained.
Accordingly, the Commission should recognize the similar needs of sellers of electricity as a commodity in a competitive wholesale marketplace and should keep the information confidential. One option would be for this NOPR to mirror more closely the gas filing requirements laid out in RM01-9-000. In that Order, the Commission stated it would aggregate the data submitted before determining if any action was necessary. Furthermore, the Commission has stated that it need only collect information regarding transactions that go to delivery. The Commission should follow the same approach here in the Final Rule since, as discussed below, providing information on book-outs and other financial transactions will be burdensome to produce and of little use to the Commission in its market-monitoring activities.