FERC Market-Based Rate Authorization and Market Power Analyses in Wholesale Electric Markets

The Federal Energy Regulatory Commission (FERC) requires that entities desiring to make wholesale sales of electricity at market-based rates document that they do not possess horizontal market power. In 2007's Order No. 697, FERC codified two "indicative" horizontal market power screens -- referred to as the market share screen and the pivotal supplier screen -- as part of the process to determine the appropriateness of market-based rate authority by jurisdictional suppliers. The procedures for applying these market power screens have been clarified and modified in a series of orders since 2007, most recently with Order No. 816 in 2015.

Analysis Group experts, including Vice President Eric Korman, have been extensively involved in applying these market power screens, preparing supporting affidavits, and performing other market power analyses on behalf of clients seeking to obtain or retain market-based rate authorization. Analysis Group teams have also provided additional analyses to rebut "false positive" findings, including preparing delivered price test (DPT) analyses.

Analysis Group experts have testified in these matters on behalf of many clients, including FirstEnergy, Idaho Power, MidAmerican Energy, Minnesota Power, New Brunswick Energy Marketing, PacifiCorp, Southern Company, and individual merchant generators. Through these efforts, as well as those involving other competitive studies, Analysis Group has acquired extensive knowledge of competitive conditions throughout the country, along with detailed data necessary to perform the analyses required by FERC in market-based rate and other contexts.

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