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FERC Modifies Rules for Authorization of Electric Utility Mergers and Acquisitions

On February 21, 2019, the Federal Energy Regulatory Commission (FERC) issued a final rule adopting changes to its regulations for the authorization of public utility mergers and acquisitions under section 203 of the Federal Power Act (FPA).  FERC issued this new rule to bring its regulations in line with recent action by Congress to amend FPA section 203(a)(1)(B) to affirmatively add a monetary threshold for requiring authorization for utility mergers of jurisdictional facilities.  This revision addresses what many in the electricity industry have considered a shortcoming of FPA section 203, as the previous version of the statute required prior approval for even low-dollar acquisitions by public utilities of existing electric transmission facilities, such as small sections of dormant or outdated transmission lines.

The statutory revisions and corresponding FERC final rule provide that no public utility shall, without first securing Commission authorization, “merge or consolidate, directly or indirectly, its facilities subject to the jurisdiction of the Commission, or any part thereof, with the facilities of any other person, or any part thereof, that are subject to the jurisdiction of the Commission and have a value in excess of $10 million, by any means whatsoever.”  The final rule also adds a new regulation implementing FPA section 203(a)(7), which requires FERC notification (but not approval) of any merger or consolidation of jurisdictional facilities valued at greater than $1 million but less than $10 million.

The new regulations will go into effect thirty days after publication in the Federal Register.