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Market-Based Rate Authorization
Practical Law Glossary Item 5-520-9879 (Approx. 3 pages)
Glossary
Market-Based Rate Authorization
Authorization that must be obtained by power marketers and other sellers from the Federal Energy Regulatory Commission (FERC) before they can sell electricity, capacity and ancillary services on a wholesale basis at market rates. To obtain this authorization, a seller must submit an application that, among other things, demonstrates that it and its affiliates lack or have adequately mitigated:
- Horizontal market power in the generation market. This can be done by showing that the seller and its affiliates own a relatively low percentage of the electric generation in the relevant market controlled by the seller and its affiliates.
- Vertical market power in the transmission market. A seller can demonstrate this by submitting evidence that any transmission assets it and its affiliates own are held subject to an obligation to provide open access transmission service.
(18 C.F.R. Subpart H of Part 35; FERC Order No. 697, as modified by FERC Order No. 816)