Market Surveillance Administrator – Historical Trading Report – Fair, Efficient and Openly Competitive Electricity Market Regulation
In this decision, the AUC considered an application by the Market Surveillance Administrator (the “MSA”) under subsection 51(1)(b) of the Alberta Utilities Commission Act (“AUCA”) and pursuant to Section 20 of AUC Rule 001: Rules of Practice. In its notice and application, the MSA requested that the AUC direct the Alberta Electric System Operator (the “AESO”) to stop publishing the historical trading report (the “HTR”).
The Historical Trading Report
The AUC explained that the HTR is an hourly spreadsheet published by the AESO five to ten minutes after the end of each hour. It shows the price and quantity of each offer made to the power pool in that hour. The HTR does not reveal the market participant that made the offer or the associated generating unit.
The HTR discloses all offers (i.e., price/quantity pairs) made by generators to the power pool to dispatch power at specified quantities and prices during the preceding hour, along with what their price/quantity pairs were during the previous day. The AUC noted that the HTR does not identify the names of the generating units or the associated offer control for each price/quantity pair. However, the asset identification and offer control associated with each price/quantity pair are disclosed in a separate report called the Merit Order Snapshot Report (“MOSR”) that is published by the AESO 60 days later.
The MSA submitted that data being released by the AESO in the HTR undermines the fair, efficient and openly competitive nature of the wholesale electricity market and adversely affects the structure and performance of the market by relieving competitive constraints on the exercise of market power.
The AUC found that the MSA’s notice and application raised two important issues for consideration, namely:
(a) Is the AESO required by Section 6 of the Fair, Efficient and Open Competition Regulation (the “FEOC Regulation”) to publish the HTR in its current format; and
(b) If the AESO is not required to publish the HTR, is its publication consistent with the fair, efficient and openly competitive operation of the electricity market?
Statutory Scheme
The AUC explained that AUCA section 56(4)(b) empowers the AUC to provide direction or make any order it considers appropriate in respect of a matter raised by the MSA in a notice issued under subsection 51(1)(b). The AUC found that, in order to grant the relief requested by the MSA, the AUC must be satisfied, on a balance of probabilities, that the relief requested is appropriate.
The AUC found that to be “appropriate”, an order or direction of the AUC about a matter relating to the MSA’s mandate must be consistent with the purposes and objectives of the statutory scheme.
Section 6 of the FEOC Regulation
Section 6 of the FEOC Regulation provides as follows:
6(1) The ISO shall make available to the public the price, quantity and asset identification associated with each offer made to the power pool that is available for dispatch.
(2) The ISO shall
(a) develop information technology systems that are capable of identifying and tracking the market participant that holds the offer control associated with each price and quantity offer made to the power pool, and
(b) include that information in the reporting made available to the public under subsection (1), when the ISO’s information technology systems are capable of identifying and tracking that information.
(3) The ISO shall delay making available to the public the asset identification referred to in subsection (1) and the identification of the market participant that holds the offer control referred to in subsection (2) by 60 days after they are made to the power pool.
AUC Majority Findings
Commission Members Romaniuk and Kolesar (the “Majority”) found that section 6 of the FEOC Regulation does not require the AESO to publish the HTR in its current form. The Majority also found that the publication of the HTR immediately after the end of each hour, in its current format, is not consistent with the fair, efficient and openly competitive operation of the market because it enables market participants to exercise market power with greater precision than would be possible without the HTR.
With respect to the proper interpretation of section 6 of the FEOC Regulation, the Majority found that:
(a) the phrase “that is available for dispatch” in subsection 6(1) means that the AESO’s publication obligation under section 6 arises only with respect to those offers that are available for dispatch, and excludes from its publication obligation offers that are not available for dispatch (e.g., capacity reserved for ancillary services);
(b) subsections 6(1) and (2) must be read as describing what types of information the AESO must publish, with no reference to timing, while subsection 6(3) must be read as restricting when some of that information may be published; and
(c) subsection 6(3) governs the timing of the AESO’s publication of information relating to asset identification and offer control (i.e. 60 days after offers are submitted to the power pool). The AUC noted that subsection 6(3) is silent as to when the AESO must publish the associated price and quantity information.
The Majority further found that:
(a) The AESO’s discretion as to the timing of the release of price and quantity information under section 6 of the FEOC Regulation is not limitless;
(b) The AESO is required to time the release of price/quantity information so that it provides the benefits of an “information rich environment” without distorting the market or the structure of the electric industry by creating an unfair advantage for any participant;
(c) The ongoing publication of the HTR in its current format and timing is not a statutory requirement; and
(d) All of the AESO’s FEOC Regulation section 6 obligations with respect to the publication of various types of market information are satisfied by the publication of the MOSR.
HTR Not Consistent with Fair, Efficient and Openly Competitive Electricity Market
Having concluded that section 6 of the FEOC Regulation does not require the AESO to publish the HTR in its current form, the AUC went on to consider whether the current form of the HTR and the timing of its publication was consistent with the fair, efficient and openly competitive operation of the electricity market.
The AUC found that, in certain circumstances, the HTR could allow market participants to exercise market power with greater precision than would be possible without the HTR. The Majority found that the publication of the HTR could reduce dispatch risk by revealing the residual demand faced by generators in the hour just passed. The Majority found that the effect of the HTR is to relax the competitive restraints on the ability of generators to exercise market power and, hence, in certain circumstances to result in market outcomes incompatible with an efficient market for electricity based on fair and open competition. The Majority held that such an outcome was inconsistent with the objectives and principles underlying the legislation governing the market for electricity in Alberta.
Order
The Majority directed that the AESO cease publication of the HTR as soon as practicable, and by no later than 11:59 p.m. on Tuesday May 23, 2017.
Dissent of Commissioner Bill Lyttle
In a dissenting opinion, Commissioner Lyttle would have interpreted the phrase, “is available for dispatch” in subsection 6(1) of the FEOC Regulation, as requiring the AESO to immediately publish the price and quantity of each offer made to the power pool. In Commissioner Lyttle’s view, the use of the word “is” rather than the word “was” indicated that the legislature did not intend a delayed publication of the price and quantity information. Commissioner Lyttle noted, as further support for this finding, that the drafters took exactly such an approach when drafting subsection 3(2)(b) of the FEOC Regulation, which allows market participants to share records “60 days after the price and quantity offer was made to the power pool”.
Commissioner Lyttle found that Section 6 of the FEOC Regulation requires the AESO to publish price and quantity information for each offer made to the power pool when that offer is available for dispatch, and that the AESO is required to publish the information found in the HTR in real time.
