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Power industry seeks clarity on FERC proposal to limit asset merger reviews


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Power industry seeks clarity on FERC proposal to limit asset merger reviews

Industry groups largely backed a proposed rule to limit which U.S. power asset mergers and acquisitions the Federal Energy Regulatory Commission must approve but suggested changes to the proposal, including those clarifying the types of transactions the commission must review.

The comments were in response to a November 2018 notice of proposed rulemaking FERC issued to comply with a newly passed law from the U.S. Congress. The proposal could reduce FERC's workload and cut red tape for utilities, as the commission's current rules require the agency to authorize any merger or consolidation of a public utility's assets regardless of its value.

Under the proposal, commission approval would only be needed for mergers and acquisitions of FERC-jurisdictional facilities totaling more than $10 million. The agency would not need to approve transactions valued below $10 million, but the proposed rule would amend Section 203 of the Federal Power Act to require public utilities to notify the commission of mergers and consolidations of FERC-jurisdictional facilities within 30 days of their completion if they are valued at between $1 million and $10 million. Those filings must provide a "narrative description" of the transaction, including the identity of all involved parties and all associated FERC-jurisdictional facilities.

In recently filed comments, the Edison Electric Institute, or EEI, said FERC's proposal was consistent with Congress' goals of minimizing regulatory burdens but suggested a handful of changes. EEI asked FERC to state that notifications for deals between $1 million and $10 million can be filed in standard word-document filings via FERC's eFiling portal. The group also asked the commission to clarify that it will not notice such filings for public comment or take any action on them to avoid an "inadvertent signal that such dockets are subject to a full rulemaking process," EEI said.

EEI's views clashed with those of consumer advocacy group Public Citizen, which urged FERC to publicly notice those lower-priced deals.

"Just like the commission, the public, too, must be able to 'track the transactions' valued at between $1 million and $10 million," Public Citizen's Energy Program Director Tyson Slocum said.

EEI, which represents investor-owned utilities, also worried the proposed rule could require FERC to approve purchases of nonpublic utility assets valued over $10 million. The proposal said FERC had jurisdiction to review higher-priced transactions that involve a public utility's acquisition of facilities from a nonpublic entity if those assets will be subject to FERC jurisdiction after the deal is consummated.

According to EEI, Congress stated that FERC approval is only required if a public utility is acquiring assets that are already subject to the commission's jurisdiction. The group therefore asked FERC to "reconsider and clarify" its interpretation of the types of facilities for which the proposal would apply.

The International Transmission Co. echoed EEI's comments, saying the plain language of the newly revised Section 203 "does not grant the commission authority to review transactions that involve a public utility's acquisition of facilities from non-public utilities."

Both the American Public Power Association and National Rural Electric Cooperative Association asked FERC to clarify and expand the notification requirements for transactions below $10 million, including to require identification of the filing utility's energy affiliates and subsidiaries and submission of post-transaction corporate organizational charts.

FERC's proposal is in response to a recently enacted bill that addressed inconsistencies in the Energy Policy Act of 2005. The 2005 law eliminated the monetary threshold governing when FERC needs to review mergers and consolidations of FERC-jurisdictional utility assets while simultaneously raising the threshold for agency review of other types of transactions from $50,000 to $10 million. (FERC docket RM19-4)