On June 15th, the FERC approved a final rule intended to enhance credit risk management throughout the organized wholesale electric power markets. The FERC’s adoption of the final rule will allow electric power market operators to share credit-related information with other electric power market operators so they can better assess the credit risks of market participants.
Although the market operators’ tariffs currently include confidentiality provisions that prohibit information sharing, the newly adopted rule provides an overview that explains why allowing market operators to share credit-related information might improve their ability to assess market participants’ credit exposure throughout multiple electric power markets. Under the new rule, market operators may also be able to respond to credit events more quickly and efficiently.
The final rule and the July 2022 Notice of Proposed Rulemaking substantiate the FERCs commitment to:
ensure that market rules mitigate the overall risks of unexpected defaults by market participants
respond to concerns raised at the February 25-26, 2021 FERC staff technical conference on principles and best practices for credit risk management within organized wholesale electric markets
The final rule will go into effect 60 days following publication in the Federal Register.