## Facts

- Zephyr Wind, LLC (Zephyr) was constructing a wind-powered electric generating facility in Minnesota.
- The facility consisted of 15 wind turbines with total nameplate capacity of 30 MW.
- Zephyr’s project included a five-mile transmission line used to interconnect the facility to Northern States Power Company’s (Northern) transmission system.
- The generating facility was Zephyr’s only energy asset.
- Zephyr and Northern entered into three power-purchase agreements that allocated all of Zephyr’s electric output to Northern.
- In support of its request to sell at market-based rates, Zephyr relied on a market-power analysis that had been submitted by Tuscola Bay Wind, LLC and accepted by the Federal Energy Regulatory Commission (FERC).
- Using that previously accepted analysis, Zephyr represented that it passed FERC’s indicative horizontal market-power screens (including the supplier screen assessing whether the market can meet peak demand without the seller and the wholesale market-share screen).
- Zephyr applied to FERC for authorization to sell electric energy at wholesale at market-based rates.
- Zephyr also requested waiver of the Open Access Transmission Tariff (OATT) and Open Access Same-Time Information System (OASIS) filing requirements.

## Issues

1. Whether Zephyr demonstrated that it lacked horizontal and vertical market power sufficient for FERC to authorize wholesale sales at market-based rates.
2. Whether Zephyr qualified for waiver of OATT and OASIS requirements given that it owned a limited interconnection transmission line and did not seek to function as a transmission provider.

## Decision

- FERC granted Zephyr authority to sell electric energy at wholesale at market-based rates based on Zephyr’s market-power showing.
- FERC granted Zephyr waiver of the OATT and OASIS filing requirements for its limited interconnection facilities.

## Legal Principles

- FERC may authorize market-based rate sales when the seller makes a sufficient showing that it and its affiliates lack (or have mitigated) horizontal and vertical market power in the relevant markets.
- Horizontal market power is evaluated using indicative screens that include (i) whether the seller is necessary to meet peak demand in the relevant market and (ii) whether the seller’s market share exceeds established thresholds.
- A small, single-facility generator whose output is fully committed under contract may present a reduced ability to exercise unilateral market power, but FERC still evaluates the seller’s showing under its established screening framework.
- FERC may waive OATT and OASIS requirements for entities that own only limited, radial, generator interconnection facilities and do not hold themselves out as providing open-access transmission service.

## Conclusion

In *Zephyr Wind, LLC*, FERC approved market-based rate authority for a 30‑MW Minnesota wind project after Zephyr supported its market-power showing by referencing a previously accepted analysis, and FERC also waived OATT and OASIS obligations because Zephyr’s transmission ownership was limited to a short interconnection line rather than a system offered for open-access transmission service.


Zephyr Wind, LLC, 141 FERC ¶ 61,113 (2012)