August 2, 2022

FERC Proposes Allowing RTOs, ISOs to Share Credit Details on Market Participants

Holland & Knight Energy and Natural Resources Blog
Paul F. Forshay
Energy and Natural Resources Blog

The Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) on July 28, 2022, that would permit regional transmission organizations (RTO) and independent system operators (ISO) to share among themselves credit-related information regarding market participants in organized wholesale power markets. FERC believes that such information sharing could allow RTOs/ISOs to more accurately assess market participants' credit exposure and risks related to their activities across organized wholesale markets.

The range of information that could be shared by an RTO/ISO would include:

  • lists of market participants with positions in an RTO's/ISO's market
  • risk and credit exposure reports and metrics
  • whether a market participant has defaulted on a financial or contractual obligation, failed to pay invoices in a timely manner or failed to meet a collateral call
  • a market participant's or its affiliate's unresolved credit/collateral issues
  • whether a market participant or its affiliate has an increased risk of default
  • anything that indicates a possible material adverse change in the creditworthiness or financial status, or an unreasonable credit risk, concerning a market participant or its affiliate

The proposed sharing of information by RTOs/ISOs would not be conditioned on the consent of the affected market participant. FERC believes that the proposed ability to share credit-related information would help RTOs/ISOs prevent or mitigate losses should a market participant experience financial distress and potentially prevent default in one organized wholesale power market from triggering default in another. That said, the NOPR does not require any particular sharing of credit-related information, but instead would afford each RTO/ISO "the discretion to share credit-related information as it sees fit." Any RTO/ISO receiving such information, however, must maintain the confidentiality of that information as it would any similar information received directly from a market participant. For now, the NOPR does not propose allowing FERC-jurisdictional RTOs/ISOs to share credit-related information with non-jurisdictional market operators such as the Electric Reliability Council of Texas (ERCOT)

In light of the foregoing proposals, FERC requests comments on the following aspects of the NOPR's proposed credit-information sharing regime:

  • restrictions, if any, on the types of information that may be shared between or among RTOs/ISOs
  • restrictions, if any, on the manner and circumstances under which information is shared
  • restrictions, if any, on the manner or circumstances in which an RTO/ISO exercises its discretion in acting on information received from another RTO/ISO
  • additional confidentiality restrictions, if any, on an RTO's/ISO's management and use of shared information
  • whether to require RTOs/ISOs to share credit-related information on a routine basis, in certain circumstances, or upon request of another RTO/ISO, and the types of information that might be included in any sharing requirement
  • the benefits and burdens on RTOs/ISOs and market participants of potential requirements to share credit-related information
  • possible frameworks to account for jurisdictional limitations while enabling FERC-jurisdictional RTOs/ISOs to share and receive information with and from non-jurisdictional market operators such as ERCOT

Initial comments are due 60 days from the NOPR's publication in the Federal Register, and reply comments are due 90 days after publication.

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