On February 16, the Federal Energy Regulatory Commission (FERC) determined that simultaneous locational exchanges of wholesale electric power require prior FERC approval when the exchange involves the merchant function of a public utility transmission provider and its affiliated transmission provider’s transmission system. FERC’s decision addresses uncertainty with respect to whether simultaneous locational exchanges include the provision of transmission service or are instead solely wholesale power sales. FERC determined that simultaneous locational exchanges that involve a merchant function’s affiliated transmission system may enable the merchant function to perform transmission functions. For that reason, such exchanges require prior FERC approval following a case-by-case evaluation; exchanges that do not involve an affiliated transmission system are considered wholesale power sales that do not require such an evaluation.

The case originated when Puget Sound Energy, Inc. (Puget Sound) filed a petition for declaratory order requesting that FERC find that simultaneous locational exchanges of electric power are wholesale power sales rather than transmission transactions subject to the terms and conditions of an Open Access Transmission Tariff (OATT). In its petition, Puget Sound defined simultaneous locational exchanges of electric power as...

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