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Federal Energy Regulatory Commission
public utility files its estimate of
stranded costs for the customer with
the Commission.
(A) Before marketing or brokering
can begin, the utility and customer
must execute an agreement identifying, at a minimum, the amount and
the price of capacity and associated energy the customer is entitled to schedule, and the duration of the customer’s
marketing or brokering of such capacity and energy.
(ii) If agreement over marketing or
brokering cannot be reached, and the
parties seek Commission resolution of
disputed issues, upon issuance of a
Commission order resolving the disputed issues, the customer may reevaluate its decision in paragraph
(c)(5)(i) of this section to exercise the
marketing or brokering option. The
customer must notify the utility in
writing within 30 days of issuance of
the Commission’s order resolving the
disputed issues whether the customer
will market or broker a portion or all
of the capacity and energy associated
with stranded costs allowed by the
Commission.
(iii) If a customer undertakes the
brokering option, and the customer’s
brokering efforts fail to produce a
buyer within 60 days of the date of the
brokering agreement entered into between the customer and the utility, the
customer shall relinquish all rights to
broker the released capacity and associated energy and will pay stranded
costs as determined by the formula in
paragraph (c)(2)(iii) of this section.
(d) Recovery of retail stranded costs—1)
General requirement. A public utility
may seek to recover retail stranded
costs through rates for retail transmission services only if the state regulatory authority does not have authority under state law to address stranded
costs at the time the retail wheeling is
required.
(2) Evidentiary demonstration necessary
for retail stranded cost recovery. A public
utility seeking to recover retail stranded costs in accordance with paragraph
(d)(1) of this section must demonstrate
that:
(i) It incurred costs to provide service
to a retail customer that obtains retail
wheeling based on a reasonable expec-

§ 35.28
tation that the utility would continue
to serve the customer; and
(ii) The stranded costs are not more
than the customer would have contributed to the utility had the customer
remained a retail customer of the utility.
[Order 888–A, 62 FR 12460, Mar. 14, 1997]

§ 35.27

Authority of State commissions.

Nothing in this part—
(a) Shall be construed as preempting
or affecting any jurisdiction a State
commission or other State authority
may have under applicable State and
Federal law, or
(b) Limits the authority of a State
commission in accordance with State
and Federal law to establish
(1) Competitive procedures for the acquisition of electric energy, including
demand-side management, purchased
at wholesale, or
(2) Non-discriminatory fees for the
distribution of such electric energy to
retail consumers for purposes established in accordance with State law.
[Order 697, 72 FR 40038, July 20, 2007]

§ 35.28 Non-discriminatory open access
transmission tariff.
(a) Applicability. This section applies
to any public utility that owns, controls or operates facilities used for the
transmission of electric energy in
interstate commerce and to any nonpublic utility that seeks voluntary
compliance with jurisdictional transmission tariff reciprocity conditions.
(b) Definitions—(1) Requirements service agreement means a contract or rate
schedule under which a public utility
provides any portion of a customer’s
bundled wholesale power requirements.
(2) Economy energy coordination agreement means a contract, or service
schedule thereunder, that provides for
trading of electric energy on an ‘‘if, as
and when available’’ basis, but does not
require either the seller or the buyer to
engage in a particular transaction.
(3) Non-economy energy coordination
agreement means any non-requirements
service agreement, except an economy
energy coordination agreement as defined in paragraph (b)(2) of this section.

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§ 35.28

18 CFR Ch. I (4–1–16 Edition)

(4) Demand response means a reduction in the consumption of electric energy by customers from their expected
consumption in response to an increase
in the price of electric energy or to incentive payments designed to induce
lower consumption of electric energy.
(5) Demand response resource means a
resource capable of providing demand
response.
(6) An operating reserve shortage
means a period when the amount of
available supply falls short of demand
plus the operating reserve requirement.
(7) Market Monitoring Unit means the
person or entity responsible for carrying out the market monitoring functions that the Commission has ordered
Commission-approved independent system operators and regional transmission organizations to perform.
(8) Market Violation means a tariff
violation, violation of a Commissionapproved order, rule or regulation,
market manipulation, or inappropriate
dispatch that creates substantial concerns regarding unnecessary market
inefficiencies.
(c) Non-discriminatory open access
transmission tariffs.
(1) Every public utility that owns,
controls, or operates facilities used for
the transmission of electric energy in
interstate commerce must have on file
with the Commission an open access
transmission tariff of general applicability for transmission services, including ancillary services, over such facilities. Such tariff must be the pro forma
tariff promulgated by the Commission,
as amended from time to time, or such
other tariff as may be approved by the
Commission consistent with the principles set forth in Commission rulemaking proceedings promulgating and
amending the pro forma tariff.
(i) Subject to the exceptions in paragraphs (c)(1)(ii), (c)(1)(iii), (c)(1)(iv),
and (c)(1)(v) of this section, the open
access transmission tariff, which tariff
must be the pro forma tariff required by
Commission rulemaking proceedings
promulgating and amending the pro
forma tariff, and accompanying rates
must be filed no later than 60 days
prior to the date on which a public
utility would engage in a sale of electric energy at wholesale in interstate
commerce or in the transmission of

electric energy in interstate commerce.
(ii) If a public utility owns, controls,
or operates facilities used for the
transmission of electric energy in
interstate commerce, it must file the
revisions to its open access transmission tariff required by Commission
rulemaking proceedings promulgating
and amending the pro forma tariff, pursuant to section 206 of the FPA and accompanying rates pursuant to section
205 of the FPA in accordance with the
procedures set forth in Commission
rulemaking proceedings promulgating
and amending the pro forma tariff.
(iii) If a public utility owns, controls,
or operates transmission facilities used
for the transmission of electric energy
in interstate commerce, such facilities
are jointly owned with a non-public
utility, and the joint ownership contract prohibits transmission service
over the facilities to third parties, the
public utility with respect to access
over the public utility’s share of the
jointly owned facilities must file the
revisions to its open access transmission tariff required by Commission
rulemaking proceedings promulgating
and amending the pro forma tariff pursuant to section 206 of the FPA and accompanying rates pursuant to section
205 of the FPA in accordance with the
procedures set forth in Commission
rulemaking proceedings promulgating
and amending the pro forma tariff.
(iv) Any public utility whose transmission facilities are under the independent control of a Commission-approved ISO or RTO may satisfy its obligation under paragraph (c)(1) of this
section, with respect to such facilities,
through the open access transmission
tariff filed by the ISO or RTO.
(v) If a public utility obtains a waiver
of the tariff requirement pursuant to
paragraph (d) of this section, it does
not need to file the open access transmission tariff required by this section.
(vi) Any public utility that seeks a
deviation from the pro forma tariff promulgated by the Commission, as
amended from time to time, must demonstrate that the deviation is consistent with the principles set forth in
Commission rulemaking proceedings
promulgating and amending the pro
forma tariff.

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Federal Energy Regulatory Commission
(vii) Each public utility’s open access
transmission tariff must include the
standards incorporated by reference in
part 38 of this chapter.
(2) Subject to the exceptions in paragraphs (c)(2)(i) and (c)(3)(iii) of this section, every public utility that owns,
controls, or operates facilities used for
the transmission of electric energy in
interstate commerce, and that uses
those facilities to engage in wholesale
sales and/or purchases of electric energy, or unbundled retail sales of electric energy, must take transmission
service for such sales and/or purchases
under the open access transmission
tariff filed pursuant to this section.
(i) For sales of electric energy pursuant to a requirements service agreement executed on or before July 9, 1996,
this requirement will not apply unless
separately ordered by the Commission.
For sales of electric energy pursuant to
a bilateral economy energy coordination agreement executed on or before
July 9, 1996, this requirement is effective on December 31, 1996. For sales of
electric energy pursuant to a bilateral
non-economy
energy
coordination
agreement executed on or before July
9, 1996, this requirement will not apply
unless separately ordered by the Commission.
(ii) [Reserved]
(3) Every public utility that owns,
controls, or operates facilities used for
the transmission of electric energy in
interstate commerce, and that is a
member of a power pool, public utility
holding company, or other multi-lateral trading arrangement or agreement
that contains transmission rates,
terms or conditions, must have on file
a joint pool-wide or system-wide open
access transmission tariff, which tariff
must be the pro forma tariff promulgated by the Commission, as amended
from time to time, or such other open
access transmission tariff as may be
approved by the Commission consistent
with the principles set forth in Commission rulemaking proceedings promulgating and amending the pro forma
tariff.
(i) For any power pool, public utility
holding company or other multi-lateral
arrangement or agreement that contains transmission rates, terms or conditions and that is executed after Octo-

§ 35.28
ber 11, 2011, this requirement is effective on the date that transactions
begin under the arrangement or agreement.
(ii) For any power pool, public utility
holding company or other multi-lateral
arrangement or agreement that contains transmission rates, terms or conditions and that is executed on or before May 14, 2007, a public utility member of such power pool, public utility
holding company or other multi-lateral
arrangement or agreement that owns,
controls, or operates facilities used for
the transmission of electric energy in
interstate commerce must file the revisions to its joint pool-wide or systemwide open access transmission tariff required by Commission rulemaking proceedings promulgating and amending
the pro forma tariff pursuant to section
206 of the FPA and accompanying rates
pursuant to section 205 of the FPA in
accordance with the procedures set
forth in Commission rulemaking proceedings promulgating and amending
the pro forma tariff.
(iii) A public utility member of a
power pool, public utility holding company or other multi-lateral arrangement or agreement that contains
transmission rates, terms or conditions
and that is executed on or before July
9, 1996 must take transmission service
under a joint pool-wide or system-wide
open access transmission tariff filed
pursuant to this section for wholesale
trades among the pool or system members.
(4) Consistent with paragraph (c)(1) of
this section, every Commission-approved ISO or RTO must have on file
with the Commission an open access
transmission tariff of general applicability for transmission services, including ancillary services, over such facilities. Such tariff must be the pro forma
tariff promulgated by the Commission,
as amended from time to time, or such
other tariff as may be approved by the
Commission consistent with the principles set forth in Commission rulemaking proceedings promulgating and
amending the pro forma tariff.
(i) Subject to paragraph (c)(4)(ii) of
this section, a Commission-approved
ISO or RTO must file the revisions to

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§ 35.28

18 CFR Ch. I (4–1–16 Edition)

its open access transmission tariff required by Commission rulemaking proceedings promulgating and amending
the pro forma tariff pursuant to section
206 of the FPA and accompanying rates
pursuant to section 205 of the FPA in
accordance with the procedures set
forth in Commission rulemaking proceedings promulgating and amending
the pro forma tariff.
(ii) If a Commission-approved ISO or
RTO can demonstrate that its existing
open access transmission tariff is consistent with or superior to the pro
forma tariff promulgated by the Commission, as amended from time to
time, the Commission-approved ISO or
RTO may instead set forth such demonstration in its filing pursuant to section 206 in accordance with the procedures set forth in Commission rulemaking proceedings promulgating and
amending the pro forma tariff.
(d) Waivers. (1) A public utility subject to the requirements of this section
and 18 CFR parts 37 (Open Access
Same-Time Information System) and
358 (Standards of Conduct for Transmission Providers) may file a request
for waiver of all or part of such requirements for good cause shown. Except as provided in paragraph (f) of this
section, an application for waiver must
be filed no later than 60 days prior to
the time the public utility would have
to comply with the requirement.
(2) The requirements of this section,
18 CFR parts 37 (Open Access SameTime Information System) and 358
(Standards of Conduct for Transmission Providers) are waived for any
public utility that is or becomes subject to such requirements solely because it owns, controls, or operates
Interconnection
Customer’s
Interconnection Facilities, in whole or in
part, as that term is defined in the
standard generator interconnection
procedures and agreements referenced
in paragraph (f) of this section, or comparable jurisdictional interconnection
facilities that are the subject of interconnection agreements other than the
standard generator interconnection
procedures and agreements referenced
in paragraph (f) of this section, if the
entity that owns, operates, or controls
such facilities either sells electric energy, or files a statement with the

Commission that it commits to comply
with and be bound by the obligations
and procedures applicable to electric
utilities under section 210 of the Federal Power Act.
(i) The waivers referenced in this
paragraph (d)(2) shall be deemed to be
revoked as of the date the public utility ceases to satisfy the qualifications
of this paragraph (d)(2), and may be revoked by the Commission if the Commission determines that it is in the
public interest to do so. After revocation of its waivers, the public utility
must comply with the requirements
that had been waived within 60 days of
revocation.
(ii) Any eligible entity that seeks
interconnection or transmission services with respect to the interconnection facilities for which a waiver is in
effect pursuant to this paragraph (d)(2)
may follow the procedures in sections
210, 211, and 212 of the Federal Power
Act, 18 CFR 2.20, and 18 CFR part 36. In
any proceeding pursuant to this paragraph (d)(2)(ii):
(A) The Commission will consider it
to be in the public interest to grant
priority rights to the owner and/or operator of interconnection facilities
specified in this paragraph (d)(2) to use
capacity thereon when such owner and/
or operator can demonstrate that it
has specific plans with milestones to
use such capacity to interconnect its
or its affiliate’s future generation
projects.
(B) For the first five years after the
commercial operation date of the
interconnection facilities specified in
this paragraph (d)(2), the Commission
will apply the rebuttable presumption
that the owner and/or operator of such
facilities has definitive plans to use the
capacity thereon, and it is thus in the
public interest to grant priority rights
to the owner and/or operator of such facilities to use capacity thereon.
(e) Non-public utility procedures for
tariff reciprocity compliance. (1) A nonpublic utility may submit an open access transmission tariff and a request
for declaratory order that its voluntary transmission tariff meets the
requirements of Commission rulemaking proceedings promulgating and
amending the pro forma tariff.

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Federal Energy Regulatory Commission
(i) Any submittal and request for declaratory order submitted by a nonpublic utility will be provided an NJ
(non-jurisdictional) docket designation.
(ii) If the submittal is found to be an
acceptable open access transmission
tariff, an applicant in a Federal Power
Act (FPA) section 211 or 211A proceeding against the non-public utility
shall have the burden of proof to show
why service under the open access
transmission tariff is not sufficient and
why a section 211 or 211A order should
be granted.
(2) A non-public utility may file a request for waiver of all or part of the
reciprocity conditions contained in a
public utility open access transmission
tariff, for good cause shown. An application for waiver may be filed at any
time.
(f) Standard generator interconnection
procedures and agreements. (1) Every
public utility that is required to have
on file a non-discriminatory open access transmission tariff under this section must amend such tariff by adding
the standard interconnection procedures and agreement and the standard
small generator interconnection procedures and agreement required by Commission rulemaking proceedings promulgating and amending such interconnection procedures and agreements,
or such other interconnection procedures and agreements as may be required by Commission rulemaking proceedings promulgating and amending
the standard interconnection procedures and agreement and the standard
small generator interconnection procedures and agreement.
(i) Any public utility that seeks a deviation from the standard interconnection procedures and agreement or the
standard small generator interconnection procedures and agreement required by Commission rulemaking proceedings promulgating and amending
such interconnection procedures and
agreements, must demonstrate that
the deviation is consistent with the
principles set forth in Commission
rulemaking proceedings promulgating
and amending such interconnection
procedures and agreements.
(ii)–(iv) [Reserved]

§ 35.28
(2) The non-public utility procedures
for tariff reciprocity compliance described in paragraph (e) of this section
are applicable to the standard interconnection procedures and agreements.
(3) A public utility subject to the requirements of this paragraph (f) may
file a request for waiver of all or part
of the requirements of this paragraph
(f), for good cause shown.
(g) Tariffs and operations of Commission-approved independent system operators and regional transmission organizations.
(1) Demand response and pricing.
(i) Ancillary services provided by demand response resources.
(A) Every Commission-approved independent system operator or regional
transmission organization that operates organized markets based on competitive bidding for energy imbalance,
spinning re serves ,supplemental reserves, reactive power and voltage control, or regulation and frequency response ancillary services (or its functional equivalent in the Commissionapproved independent system operator’s or regional transmission organization’s tariff) must accept bids from
demand response resources in these
markets for that product on a basis
comparable to any other resources, if
the demand response resource meets
the necessary technical requirements
under the tariff, and submits a bid
under the Commission-approved independent system operator’s or regional
transmission organization’s bidding
rules at or below the market-clearing
price, unless not permitted by the laws
or regulations of the relevant electric
retail regulatory authority.
(B) Each Commission-approved independent system operator or regional
transmission organization must allow
providers of a demand response resource to specify the following in their
bids:
(1) A maximum duration in hours
that the demand response resource
may be dispatched;
(2) A maximum number of times that
the demand response resource may be
dispatched during a day; and
(3) A maximum amount of electric
energy reduction that the demand response resource may be required to
provide either daily or weekly.

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§ 35.28

18 CFR Ch. I (4–1–16 Edition)

(ii) Removal of deviation charges. A
Commission-approved independent system operator or regional transmission
organization with a tariff that contains
a day-ahead and a real-time market
may not assess charge to a purchaser
of electric energy in its day-ahead market for purchasing less power in the
real-time market during a real-time
market period for which the Commission-approved independent system operator or regional transmission organization declares an operating reserve
shortage or makes a generic request to
reduce load to avoid an operating reserve shortage.
(iii) Aggregation of retail customers.
Each
Commission-approved
independent system operator and regional
transmission organization must accept
bids from an aggregator of retail customers that aggregates the demand response of the customers of utilities
that distributed more than 4 million
megawatt-hours in the previous fiscal
year, and the customers of utilities
that distributed 4 million megawatthours or less in the previous fiscal
year, where the relevant electric retail
regulatory authority permits such customers’ demand response to be bid into
organized markets by an aggregator of
retail customers. An independent system operator or regional transmission
organization must not accept bids from
an aggregator of retail customers that
aggregates the demand response of the
customers of utilities that distributed
more than 4 million megawatt-hours in
the previous fiscal year, where the relevant electric retail regulatory authority prohibits such customers’ demand
response to be bid into organized markets by an aggregator of retail customers, or the customers of utilities
that distributed 4 million megawatthours or less in the previous fiscal
year, unless the relevant electric retail
regulatory authority permits such customers’ demand response to be bid into
organized markets by an aggregator of
retail customers.
(iv) Price formation during periods of
operating reserve shortage.
(A) Each Commission-approved independent system operator or regional
transmission organization must modify
its market rules to allow the marketclearing price during periods of oper-

ating reserve shortage to reach a level
that rebalances supply and demand so
as to maintain reliability while providing sufficient provisions for mitigating market power.
(B) A Commission-approved independent system operator or regional
transmission organization may phase
in this modification of its market
rules.
(v) Demand response compensation in
energy markets. Each Commission-approved independent system operator or
regional
transmission
organization
that has a tariff provision permitting
demand response resources to participate as a resource in the energy market by reducing consumption of electric energy from their expected levels
in response to price signals must:
(A) Pay to those demand response resources the market price for energy for
these reductions when these demand
response resources have the capability
to balance supply and demand and
when payment of the market price for
energy to these resources is cost-effective as determined by a net benefits
test accepted by the Commission;
(B) Allocate the costs associated with
demand response compensation proportionally to all entities that purchase
from the relevant energy market in the
area(s) where the demand response reduces the market price for energy at
the time when the demand response resource is committed or dispatched.
(2) Long-term power contracting in organized markets. Each Commission-approved independent system operator or
regional
transmission
organization
must provide a portion of its Web site
for market participants to post offers
to buy or sell power on a long-term
basis.
(3) Market monitoring policies.
(i) Each Commission-approved independent system operator or regional
transmission organization must modify
its tariff provisions governing its Market Monitoring Unit to reflect the directives provided in OrderNo. 719, including the following:
(A) Each Commission-approved independent system operator or regional
transmission organization must include in its tariff a provision to provide
its Market Monitoring Unit access to

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Federal Energy Regulatory Commission
Commission-approved independent system operator and regional transmission organization market data, resources and personnel to enable the
MarketMonitoring Unit to carry out
its functions.
(B) The tariff provision must provide
the Market Monitoring Unit complete
access to the Commission-approved
independent system operator’s and regional
transmission
organization’s
databases of market information.
(C) The tariff provision must provide
that any data created by the Market
Monitoring Unit, including, but not
limited to, reconfiguring of the Commission-approved independent system
operator’s and regional transmission
organization’s data, will be kept within
the exclusive control of the Market
Monitoring Unit.
(D) The Market Monitoring Unit
must report to the Commission-approved independent system operator’s
or regional transmission organization’s
board of directors, with its management members removed, or to an independent committee of the Commissionapproved independent system operator’s or regional transmission organization’s board of directors. A Commission-approved independent system operator or regional transmission organization that has both an internal Market Monitoring Unit and an external
Market Monitoring Unit may permit
the internal Market Monitoring Unit
to report to management and the external Market Monitoring Unit to report to the Commission-approved independent system operator’s or regional
transmission organization’s board of
directors with its management members removed, or to an independent
committee of the Commission-approved independent system operator or
regional
transmission
organization
board of directors. If the internal market monitor is responsible for carrying
out any or all of the core Market Monitoring Unit functions identified in
paragraph (g)(3)(ii) of this section, the
internal market monitor must report
to the independent system operator’s
or regional transmission organization’s
board of directors.
(E) A Commission-approved independent system operator or regional
transmission organization may not

§ 35.28
alter the reports generated by the Market Monitoring Unit, or dictate the
conclusions reached by the Market
Monitoring Unit.
(F) Each Commission-approved independent system operator or regional
transmission organization must consolidate the core Market Monitoring
Unit provisions into one section of its
tariff. Each independent system operator or regional transmission organization must include a mission statement
in the introduction to the Market Monitoring Unit provisions that identifies
the Market Monitoring Unit’s goals,
including the protection of consumers
and market participants by the identification and reporting of market design
flaws and market power abuses.
(ii) Core Functions of Market Monitoring Unit. The Market Monitoring
Unit must perform the following core
functions:
(A) Evaluate existing and proposed
market rules, tariff provisions and
market design elements and recommend proposed rule and tariff
changes to the Commission-approved
independent system operator or regional transmission organization, to
the Commission’s Office of Energy
Market Regulation staff and to other
interested entities such as state commissions and market participants, provided that:
(1) The Market Monitoring Unit is
not to effectuate its proposed market
design itself, and
(2) The Market Monitoring Unit must
limit distribution of its identifications
and recommendations to the independent system operator or regional
transmission organization and to Commission staff in the event it believes
broader dissemination could lead to exploitation, with an explanation of why
further dissemination should be avoided at that time.
(B) Review and report on the performance of the wholesale markets to
the Commission-approved independent
system operator or regional transmission organization, the Commission,
and other interested entities such as
state commissions and market participants, on at least a quarterly basis and
submit a more comprehensive annual
state of the market report. The Market

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§ 35.28

18 CFR Ch. I (4–1–16 Edition)

Monitoring Unit may issue additional
reports as necessary.
(C) Identify and notify the Commission’s Office of Enforcement staff of instances in which a market participant’s or the Commission-approved
independent system operator’s or regional transmission organization’s behavior may require investigation, including, but not limited to, suspected
Market Violations.
(iii) Tariff administration and mitigation
(A) A Commission-approved independent system operator or regional
transmission organization may not
permit its Market Monitoring Unit,
whether internal or external, to participate in the administration of the
Commission-approved independent system operator’s or regional transmission organization’s tariff or, except
as provided in paragraph (g)(3)(iii)(D)
of this section, to conduct prospective
mitigation.
(B) A Commission-approved independent system operator or regional
transmission organization may permit
its Market Monitoring Unit to provide
the inputs required for the Commission-approved independent system operator or regional transmission organization to conduct prospective mitigation, including, but not limited to, reference levels, identification of system
constraints, and cost calculations.
(C) A Commission-approved independent system operator or regional
transmission organization may allow
its Market Monitoring Unit to conduct
retrospective mitigation.
(D) A Commission-approved independent system operator or regional
transmission organization with a hybrid Market Monitoring Unit structure
may permit its internal market monitor to conduct prospective and/or retrospective mitigation, in which case it
must assign to its external market
monitor the responsibility and the
tools to monitor the quality and appropriateness of the mitigation.
(E) Each Commission-approved independent system operator or regional
transmission organization must identify in its tariff the functions the Market Monitoring Unit will perform and
the functions the Commission-approved independent system operator or

regional transmission organization will
perform.
(iv) Protocols on Market Monitoring
Unit referrals to the Commission of suspected violations.
(A) A Market Monitoring Unit is to
make a non-public referral to the Commission in all instances where the Market Monitoring Unit has reason to believe that a Market Violation has occurred. While the Market Monitoring
Unit need not be able to prove that a
Market Violation has occurred, the
Market Monitoring Unit is to provide
sufficient credible information to warrant further investigation by the Commission. Once the Market Monitoring
Unit has obtained sufficient credible
information to warrant referral to the
Commission, the Market Monitoring
Unit is to immediately refer the matter to the Commission and desist from
independent action related to the alleged Market Violation. This does not
preclude the Market Monitoring Unit
from continuing to monitor for any repeated instances of the activity by the
same or other entities, which would
constitute new Market Violations. The
Market Monitoring Unit is to respond
to requests from the Commission for
any additional information in connection with the alleged Market Violation
it has referred.
(B) All referrals to the Commission
of alleged Market Violations are to be
in writing, whether transmitted electronically, by fax, mail, or courier. The
Market Monitoring Unit may alert the
Commission orally in advance of the
written referral.
(C) The referral is to be addressed to
the Commission’s Director of the Office
of Enforcement, with a copy also directed to both the Director of the Office of Energy Market Regulation and
the General Counsel.
(D) The referral is to include, but
need not be limited to, the following
information.
(1) The name[s] of and, if possible,
the contact information for, the
entity[ies] that allegedly took the
action[s] that constituted the alleged
Market Violation[s];
(2) The date[s] or time period during
which the alleged Market Violation[s]
occurred and whether the alleged
wrongful conduct is ongoing;

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Federal Energy Regulatory Commission
(3) The specific rule or regulation,
and/or tariff provision, that was allegedly violated, or the nature of any inappropriate dispatch that may have occurred;
(4) The specific act[s] or conduct that
allegedly constituted the Market Violation;
(5) The consequences to the market
resulting from the acts or conduct, including, if known, an estimate of economic impact on the market;
(6) If the Market Monitoring Unit believes that the act[s] or conduct constituted a violation of the anti-manipulation rule of Part 1c, a description of
the alleged manipulative effect on market prices, market conditions, or market rules;
(7) Any other information the Market
Monitoring Unit believes is relevant
and may be helpful to the Commission.
(E) Following a referral to the Commission, the Market Monitoring Unit is
to continue to notify and inform the
Commission of any information that
the Market Monitoring Unit learns of
that may be related to the referral, but
the Market Monitoring Unit is not to
undertake any investigative steps regarding the referral except at the express direction of the Commission or
Commission Staff.
(v) Protocols on Market Monitoring
Unit Referrals to the Commission of Perceived Market Design Flaws and Recommended Tariff Changes.
(A) A Market Monitoring Unit is to
make a referral to the Commission in
all instances where the Market Monitoring Unit has reason to believe market design flaws exist that it believes
could effectively be remedied by rule or
tariff changes. The Market Monitoring
Unit must limit distribution of its
identifications and recommendations
to the independent system operator or
regional transmission organization and
to the Commission in the event it believes broader dissemination could lead
to exploitation, with an explanation of
why further dissemination should be
avoided at that time.
(B) All referrals to the Commission
relating to perceived market design
flaws and recommended tariff changes
are to be in writing, whether transmitted electronically, by fax, mail, or
courier. The Market Monitoring Unit

§ 35.28
may alert the Commission orally in advance of the written referral.
(C) The referral should be addressed
to the Commission’s Director of the Office of Energy Market Regulation, with
copies directed to both the Director of
the Office of Enforcement and the General Counsel.
(D) The referral is to include, but
need not be limited to, the following
information.
(1) A detailed narrative describing
the perceived market design flaw[s];
(2) The consequences of the perceived
market design flaw[s], including, if
known, an estimate of economic impact on the market;
(3) The rule or tariff change(s) that
the Market Monitoring Unit believes
could remedy the perceived market design flaw;
(4) Any other information the Market
Monitoring Unit believes is relevant
and may be helpful to the Commission.
(E) Following a referral to the Commission, the Market Monitoring Unit is
to continue to notify and inform the
Commission of any additional information regarding the perceived market
design flaw, its effects on the market,
any additional or modified observations concerning the rule or tariff
changes that could remedy the perceived design flaw, any recommendations made by the Market Monitoring
Unit to the regional transmission organization or independent system operator, stakeholders, market participants or state commissions regarding
the perceived design flaw, and any actions taken by the regional transmission organization or independent
system operator regarding the perceived design flaw.
(vi) Market Monitoring Unit ethics
standards. Each Commission-approved
independent system operator or regional transmission organization must
include in its tariff ethical standards
for its Market Monitoring Unit and the
employees of its Market Monitoring
Unit. At a minimum, the ethics standards must include the following requirements:
(A) The Market Monitoring Unit and
its employees must have no material
affiliation with any market participant
or affiliate.

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§ 35.28

18 CFR Ch. I (4–1–16 Edition)

(B) The Market Monitoring Unit and
its employees must not serve as an officer, employee, or partner of a market
participant.
(C) The Market Monitoring Unit and
its employees must have no material
financial interest in any market participant or affiliate with potential exceptions for mutual funds and non-directed investments.
(D) The Market Monitoring Unit and
its employees must not engage in any
market transactions other than the
performance of their duties under the
tariff.
(E) The Market Monitoring Unit and
its employees must not be compensated, other than by the Commission-approved independent system operator or regional transmission organization that retains or employs it, for
any expert witness testimony or other
commercial services, either to the
Commission-approved independent system operator or regional transmission
organization or to any other party, in
connection with any legal or regulatory proceeding or commercial transaction relating to the Commission-approved independent system operator or
regional transmission organization or
to the Commission-approved independent system operator’s or regional
transmission organization’s markets.
(F) The Market Monitoring Unit and
its employees may not accept anything
of value from a market participant in
excess of a de minimis amount.
(G) The Market Monitoring Unit and
its employees must advise a supervisor
in the event they seek employment
with a market participant, and must
disqualify themselves from participating in any matter that would have
an effect on the financial interest of
the market participant.
(4) Electronic delivery of data. Each
Commission-approved regional transmission organization and independent
system operator must electronically
deliver to the Commission, on an ongoing basis and in a form and manner
consistent with its own collection of
data and in a form and manner acceptable to the Commission, data related to
the markets that the regional transmission organization or independent
system operator administers.

(5) Offer and bid data. (i) Unless a
Commission-approved independent system operator or regional transmission
organization obtains Commission approval for a different period, each Commission-approved independent system
operator and regional transmission organization must release its offer and
bid data within three months.
(ii) A Commission-approved independent system operator or regional
transmission organization must mask
the identity of market participants
when releasing offer and bid data. The
Commission-approved independent system operators and regional transmission organization may propose a
time period for eventual unmasking.
(6) Responsiveness of Commission-approved independent system operators and
regional transmission organizations. Each
Commission-approved independent system operator or regional transmission
organization must adopt business practices and procedures that achieve Commission-approved independent system
operator and regional transmission organization board of directors’ responsiveness to customers and other stakeholders and satisfy the following criteria:
(i) Inclusiveness. The business practices and procedures must ensure that
any customer or other stakeholder affected by the operation of the Commission-approved independent system operator or regional transmission organization, or its representative, is permitted to communicate the customer’s
or other stakeholder’s views to the
independent system operator’s or regional
transmission
organization’s
board of directors;
(ii) Fairness in balancing diverse interests. The business practices and procedures must ensure that the interests of
customers or other stakeholders are
equitably considered, and that deliberation and consideration of Commission-approved independent system operator’s and regional transmission organization’s issues are not dominated
by any single stakeholder category;
(iii) Representation of minority positions. The business practices and procedures must ensure that, in instances
where stakeholders are not in total
agreement on a particular issue, minority positions are communicated to

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Federal Energy Regulatory Commission
the Commission-approved independent
system operator’s and regional transmission organization’s board of directors at the same time as majority positions; and
(iv) Ongoing responsiveness. The business practices and procedures must
provide for stakeholder input into the
Commission-approved independent system operator’s or regional transmission organization’s decisions as
well as mechanisms to provide feedback to stakeholders to ensure that information exchange and communication continue over time.
(7) Compliance filings. All Commission-approved independent system operators and regional transmission organizations must make a compliance filing with the Commission as described
in Order No. 719 under the following
schedule:
(i) The compliance filing addressing
the accepting of bids from demand response resources in markets for ancillary services on a basis comparable to
other resources, removal of deviation
charges, aggregation of retail customers, shortage pricing during periods
of operating reserve shortage, longterm power contracting in organized
markets, Market Monitoring Units,
Commission-approved independent system operators’ and regional transmission organizations’ board of directors’ responsiveness, and reporting on
the study of the need for further reforms to remove barriers to comparable treatment of demand response
resources must be submitted on or before April 28, 2009.
(ii) A public utility that is approved
as a regional transmission organization
under § 35.34, or that is not approved
but begins to operate regional markets
for electric energy or ancillary services
after December 29, 2008, must comply
with Order No. 719 and the provisions of
paragraphs (g)(1) through (g)(5) of this
section before beginning operations.
(8) Frequency regulation compensation
in ancillary services markets. Each Commission-approved independent system
operator or regional transmission organization that has a tariff that provides
for the compensation for frequency regulation service must provide such compensation based on the actual service
provided, including a capacity payment

§ 35.29
that includes the marginal unit’s opportunity costs and a payment for performance that reflects the quantity of
frequency regulation service provided
by a resource when the resource is accurately following the dispatch signal.
[Order 888, 61 FR 21693, May 10, 1996]
EDITORIAL NOTE: For FEDERAL REGISTER citations affecting § 35.28, see the List of CFR
Sections Affected, which appears in the
Finding Aids section of the printed volume
and at www.fdsys.gov.

§ 35.29 Treatment of special assessments levied under the Atomic Energy Act of 1954, as amended by
Title XI of the Energy Policy Act of
1992.
The costs that public utilities incur
relating to special assessments under
the Atomic Energy Act of 1954, as
amended by the Energy Policy Act of
1992, are costs that may be reflected in
jurisdictional rates. Public utilities
seeking to recover the costs incurred
relating to special assessments shall
comply with the following procedures.
(a) Fuel adjustment clauses. In computing the Account 518 cost of nuclear
fuel pursuant to § 35.14(a)(6), utilities
seeking to recover the costs of special
assessments through their fuel adjustment clauses shall:
(1) Deduct any expenses associated
with special assessments included in
Account 518;
(2) Add to Account 518 one-twelfth of
any payments made for special assessments within the 12-month period ending with the current month; and
(3) Deduct from Account 518 onetwelfth of any refunds of payments
made for special assessments received
within the 12-month period ending with
the current month that is received
from the Federal government because
the public utility has contested a special assessment or overpaid a special
assessment.
(b) Cost of service data requirements.
Public utilities filing rate applications
under §§ 35.12 or 35.13 (regardless of
whether the utility elects the abbreviated, unadjusted Period I, adjusted
Period I, or Period II cost support requirements) must submit cost data
that is computed in accordance with
the requirements specified in paragraphs (a) (1), (2) and (3) of this section.

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