FERC on Sept. 22 said that it has issued a notice of inquiry (NOI) into revising how it assesses market power in electric utility industry mergers and other transactions under section 203 of the Federal Power Act (FPA) and applications for market-based rate authority under section 205 of the FPA.
As noted in the NOI, section 203(a)(4) of the FPA requires FERC to approve a proposed disposition, consolidation, acquisition, or change in control if it finds that the proposed transaction will be consistent with the public interest. FERC said that its analysis of whether a proposed transaction is consistent with the public interest generally involves consideration of three factors: the effect on competition; the effect on rates; and the effect on regulation.
FERC said that there are several areas where its market power analyses for both areas differ, noting that while some of those differences may be appropriate, others may not be. FERC said that it is asking whether increased harmonization of the two analyses is warranted and feasible. FERC said that of particular interest is whether the commission should:
- Establish a simplified analysis for certain section 203 transactions that are unlikely to raise market power concerns
- Add a supply curve analysis to section 203 evaluations
- Improve FERC’s single pivotal supplier analysis in reviewing market-based rate applications, and add a similar pivotal supplier analysis to section 203 evaluations
- Add a market share analysis to review section 203 transactions
- Modify how capacity associated with long-term power purchase agreements should be attributed in section 203 transactions
- Require submission of applicant merger-related documents for certain proposed transactions
FERC said that it also seeks comment on whether, and if so, how, to more precisely define de minimis in the context of the section 203 effect on competition and whether to develop a specific test for determining when a proposed transaction meets that definition such that a full competitive analysis screen is unnecessary.
In addition, FERC said that it is seeking comment on its scope of review under section 203, including whether there are existing blanket authorizations that may be overly broad or otherwise no longer appropriate, and whether there are classes of transactions for which further blanket authorizations or abbreviated filing requirements would be appropriate.
According to the NOI, comments are due 60 days after publication in the Federal Register.