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TMCNet:  FERC Issues Letter Order Accepting Watson Cogeneration Company's 6/28/13 Filing of an Updated Market Power Analysis in Compliance with Order No. 697,...

[March 19, 2014]

FERC Issues Letter Order Accepting Watson Cogeneration Company's 6/28/13 Filing of an Updated Market Power Analysis in Compliance with Order No. 697,...

(Targeted News Service Via Acquire Media NewsEdge) FERC Issues Letter Order Accepting Watson Cogeneration Company's 6/28/13 Filing of an Updated Market Power Analysis in Compliance with Order No. 697, Request for Category 1 Status, Tariff Revisions, and Notice of Change in Status Under ER13-1847 et al WASHINGTON, March 19 -- The U.S. Department of Energy's Federal Energy Regulatory Commission issued the text of the following delegated order: In Reply Refer To: Watson Cogeneration Company Docket Nos. ER13-1847-000 and ER13-1868-000 March 19, 2014 Mr. Andrew B. Young Attorney for Watson Cogeneration Company K&L Gates LLP 1601 K Street, N.W.


Washington, D.C. 20006 Reference: Updated Market Power Analysis in Compliance with Order No. 697, Request for Category 1 Status, Tariff Revisions, and Notice of Change in Status Dear Mr. Young: On June 28, 2013, you filed on behalf of Watson Cogeneration Company (Watson) an updated market power analysis for the Southwest region in compliance with the regional reporting schedule adopted in Order No. 697 and pursuant to the Commission's order granting Watson authority to sell electric energy and capacity at market-based rates. You also submitted a request for Category 1 status representing that Watson meets the criteria for Category 1 status in the Northeast, Southeast, Central, Southwest Power Pool, and Northwest regions. Finally, you submitted a revised market-based rate tariff to incorporate the required provision adopted by the Commission in Order No. 697-A, and to make minor administrative changes.

On July 1, 2013, you also filed on behalf of Watson a notice of change in status stating that Tesoro Refining & Marketing Company, a wholly-owned subsidiary of Tesoro Corporation (Tesoro), acquired a controlling interest in Watson from BP America. You represent that this acquisition does not affect the conditions the Commission relied upon when granting Watson market-based rate authority.

Your filings were noticed on June 28, 2013 and July 1, 2013, with comments, protests or interventions due on or before July 22, 2013 and August 27, 2013, respectively. None was filed.

Pursuant to the authority delegated to the Director, Division of Electric Power Regulation - West, under 18 C.F.R. section 375.307, your submittals filed in the referenced dockets are accepted for filing, effective June 29, 2013, as requested. Based on your representations, Watson meets the criteria for a Category 2 seller in the Southwest region and a Category 1 seller in the Northeast, Southeast, Northwest, Southwest Power Pool, and Central regions and is so designated.

You state that Watson owns an approximately 420 megawatt (MW) cogeneration facility located in Carson, California within the California Independent System Operator Corp. (CAISO) market. You add that Watson is jointly owned by indirect, wholly-owned subsidiaries of Edison Mission Energy and Tesoro, and is affiliated with entities that own or control approximately 13,064 MW of generation in the CAISO market. You also state that Watson is affiliated with Southern California Edison Company (SCE), which owns transmission facilities and has transferred operational control over its transmission facilities to CAISO, and therefore has mitigated any transmission market power. Further, you affirmatively state that Watson and its affiliates have not erected barriers to entry and will not erect barriers to entry into the relevant market.

You state that Watson meets the criteria for Category 1 seller status in all regions, except for the Southwest region. You represent that Watson owns generation in the Southwest region and does not own generation in any other regions. You also represent that Watson does not own, operate, or control transmission facilities other than the limited equipment necessary to connect individual generating facilities to the transmission grid. You add that with exception of SCE, which is located in the Southwest region, Watson is not affiliated with anyone that owns, operates, or controls transmission facilities. Lastly, you represent that other than SCE, Watson is not affiliated with a franchised public utility, and does not raise any other vertical market power issues.

Market-Based Rate Authorization The Commission allows power sales at market-based rates if the seller and its affiliates do not have, or have adequately mitigated, horizontal and vertical market power.

Watson has prepared the pivotal supplier and wholesale market share screens for the CAISO market consistent with the requirements of Order No. 697, when the Commission-accepted Simultaneous Transmission Import Limit (SIL) study results are taken into consideration for the CAISO balancing authority area.

Your horizontal market power screens have been reviewed, and you pass both the pivotal supplier and wholesale market share screens in the CAISO market when the Commission-accepted SIL values for those areas are applied. Based on your representations, your submittals satisfy the Commission's requirements for market-based rate authority regarding horizontal market power.

Based on your representations, Watson's submittals also satisfy the Commission's requirements for market-based rate authority regarding vertical market power.

Watson must file electronically with the Commission Electric Quarterly Reports. Watson further must timely report to the Commission any change in status that would reflect a departure from the characteristics the Commission relied upon in granting market-based rate authority.

This action does not constitute approval of any service, rate, charge, classification, or any rule, regulation, or practice affecting such rate or service provided for in the filed documents; nor shall such action be deemed as recognition of any claimed contractual right or obligation affecting or relating to such service or rate; and such acceptance is without prejudice to any findings or orders which have been or may hereafter be made by the Commission in any proceeding now pending or hereafter instituted by or against any of the applicant(s).

This order constitutes final agency action. Requests for rehearing by the Commission may be filed within 30 days of the date of issuance of this order, pursuant to 18 C.F.R section 385.713.

Questions regarding the above order should be directed to: Federal Energy Regulatory Commission Attn: Debra Irwin Phone: (202) 502-6253 Office of Energy Market Regulation 888 First Street, N.E.

Washington, D.C. 20426 Sincerely, Steve P. Rodgers, Director Division of Electric Power Regulation - West TNS 18EstebanLiz-140320-30FurigayJane-4672898 30FurigayJane (c) 2014 Targeted News Service

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