Order 717-A Summary

On October 15, 2009, the FERC issued its rehearing order of its Standards of Conduct Final Rule.  The rehearing order contains a number of clarifications and explanations of the final rule.  The more significant findings relevant to APS from the rehearing order are detailed below. 



Classification of Marketing Function / Transmission Function Employees

Probably the most significant finding is the Commission's conclusion that legal, finance or regulatory employees that intermittently draft or re-draft umbrella agreements are in fact marketing function employees.  The Commission explained that "marketing functions are not limited to

only price terms and conditions of a contract, because non-price terms and conditions of a

contract could contain information that an affiliate could use to its advantage."  ¶80.  This finding could potentially expand the scope of employees that are classified as marketing at APS.  The order did not that the Commission "will consider waiver requests concerning an employee whose intermittent duties involve drafting non-price terms and conditions."  Although the discussion in the order only addresses the classification of legal, finance or regulatory employees as marketing employees if they are drafting or re-drafting marketing type agreements, it would seem that the same finding would extend to legal, finance or regulatory employees engaged in drafting or re-drafting transmission function contracts. 



In response to EEI, the Commission clarified that "a supervisor is not engaged in a marketing

function when that supervisor explains why a contract is being disapproved ... as long as the

supervisor is not actively and personally engaged on a day-to-day basis in the contract

negotiations."



The Commission clarified that "the term 'marketing function employee' of a transmission provider, as defined in § 358.3(d), does not include an employee of an affiliate that does not engage in transmission

transactions on the affiliated transmission provider’s transmission system."  ¶16.  Thus, employees of affiliates of APS that do not engage in transmission transactions on the APS transmission system would not be considered marketing function employees.  Similarly, the Commission confirmed "that an employee who makes sales of electric energy is performing a marketing function only if the employee works for a public utility transmission provider or a company affiliated with such a provider."  ¶17. 



The Commission clarified that "personnel who balance load with energy or generating capacity are not considered 'transmission function employee[s]' under the Standards where the balancing authority and transmission functions are separate, and the employee does not perform duties or tasks of a transmission function employee." ¶24.



Another clarification that will likely expand the scope of employees classified as transmission relates to engineer and others involved in system impact and other transmission related studies.  The Commission clarified that "'transmission function employee' includes an employee responsible for performing system impact studies or determining whether the transmission system can support the requested

services as this type of employee is planning, directing, organizing or carrying out the day-to-day transmission operations."  ¶ 27.



The Commission granted "EEI’s request for clarification that any sale of transmission service under

an open access transmission service or a pre-Order No. 888 grandfathered agreement be

considered a transmission function, while any resale or reassignment of such service be

considered a marketing function." ¶33.  However, the Commission rejected EEI's "suggestion that limited sorts of 'resale' that occur from a facility being leased, or transmission that is provided on a back-to-back basis, be treated as transmission functions."  ¶34.  The Commission suggested that this issue may be more suitable for a waiver request.



With regard to employees of an electric public utility that sell unneeded natural gas supply originally purchased for generation or local distribution company functions, the Commission declined a request by MidAmerican to not consider these employees as MFEs.  ¶74.





Permitted Communications

The Commission did offer some helpful clarifications of permitted information exchanges.  "The Commission clarifies that certain communications between marketing and  transmission function employees are permitted. Specifically, the Commission clarifies that meetings including both transmission function and marketing function employees are not barred under the Standards of Conduct as long as the meetings do not relate to

transmission or marketing functions. However, the No Conduit Rule still applies to these

meetings."  ¶89.  "Furthermore, we clarify that transmission function employees and marketing function employees may jointly participate in regulatory and compliance functions, including Federal Energy Regulatory Commission compliance activities, as long as these discussions do not include any disclosure of non-public transmission function information."  ¶90.  However, the Commission declined to permit "joint meetings for disaster/outage preparedness training ... within the permitted interactions 'to maintain

or restore operation of the transmission system or generating units, . . .' as described in

§ 358.7(h)(2)."  ¶91.  Nonetheless, these joint meetings for disaster preparedness are permitted as long as the employees do not share non-public transmission function information.  If there is a need to exchange NPTFI, the Commission offered consideration of the request on a case-by-case basis. 



The Commission clarified that "transmission providers may allow their transmission function employees to exchange non-public transmission function information to non-marketing function employees without the need for disclosure" including particularly without the need to provide equal access to all other customers following the disclosure. ¶113. 



Postings

The Commission granted "EEI’s request and provide confirmation for purposes of compliance with

the Internet posting requirements under the Standards of Conduct that it is acceptable to

post information on a publicly accessible portion of OASIS that can be reached from a

transmission provider’s website by Internet link."  ¶117.



Non-Public Transmission Information

The Commission clarified that "transmission providers are not required to post the names of transmission function employees on the Internet." ¶123.



The Commission clarified that information regarding a company's own generation, load and generation dispatch may be provided to marketing function employees to the extent that such information is not transmission function information.  ¶131.  In addition, the Commission clarified that information related to unit commitment is not "non-public transmission function information" per se.  ¶132.



Training Requirements

The Commission offered two important clarifications regarding training requirements.  First, the Commission stated that "the training requirement applies to supervisory employees who supervise other employees subject to the Standards or who may come in contact with non-public transmission function information."  ¶140.  In addition, the Commission clarified that the yearly training requirement under the Standards of Conduct requires that training occur each calendar year, not necessarily every 365 days.  ¶142.