FERC Filings
Comments of EPSA re: Amendments to Blanket Sales Certificates
Market Behavior Rules, If Adopted for the Natural Gas Industry, Should be the Same for the Electric and Gas Industries
EPSA agrees with the Commission that the goal of proper market behavior rules is to put parties “on notice,” so that parties know what is expected market behavior and can comply with those regulations. This, then, promotes certainty, thereby bolstering markets by reinforcing the confidence of energy buyers and sellers and, in turn, restoring the capital markets’ confidence in energy infrastructure investment. Hence, in developing good behavioral rules, the Commission must ensure that it does not proffer rules or standards that may result in unintentional additional uncertainty in the markets or unwittingly create or enhance barriers to entry for new market participants.
EPSA is concerned that in some instances the proposed behavioral rules fail to fully achieve that goal. Since behavioral rules are being developed for both the electric and natural gas industries, there are aspects of the rules for each that raise similar concerns. As discussed in greater detail in comments filed by Competitive Suppliers (including EPSA) on the Electric Market Behavior Rules, there are certain fundamental issues that the Commission should resolve for both sets of proposed rules. For example, any market behavioral rules must include an intent requirement to eliminate uncertainty. This is consistent with securities and commodities rules. A body of case law surrounding those rules has clearly established that intent is an express element of many security and commodity laws, regulations and rules. The Commission should also clarify in both rules that it will act quickly to review and discourage frivolous complaints under these two complaint procedures. Further, market behavior rules should include certain “safe harbor” options. As an example, each rule should include the rebuttable presumption that companies reporting information in accordance with FERC-approved standards do so in good faith and will not be penalized for inadvertent mistakes.
The Competitive Suppliers’ red-lined proposed behavior rules for the electric industry suggest specific word changes to achieve the clarity and certainty needed. Further, the red-lined rules are annotated with explanations for the clarifications requested. There are areas where the two sets of rules rely on similar uses of language and definitions that must be clarified. For instance, both the electric and natural gas proposed rules refer to the “legitimate forces of supply and demand” as a barometer of acceptable behavior. There is great uncertainty surrounding this particular language, which is discussed more explicitly in the red-lined attachment. If the Commission adopts the proposed behavior rules in this rulemaking, the Commission is urged to adopt EPSA’s alternative language where applicable. This will ensure that any interpretive decisions or case law developed as a result of these rules will provide guidance for the entire industry.