FERC is obligated by statute to
regulate key economic aspects of the electric, natural gas and oil
industries. The law requires the Commissions economic regulatory
activity because the transmission of electricity, natural gas, and
oil has often been a natural monopoly. In enacting Part II of the
Federal Power Act (FPA) in 1935, one of the primary Congressional
goals was to protect electric ratepayers from abuses of market
power. To accomplish this goal, Congress directed the FERC to
oversee sales for resale and transmission service provided by
public utilities in interstate commerce. Under Section 203 of the
FPA, the FERC must review proposed mergers, acquisitions and
dispositions of jurisdictional facilities by public utilities, if
the value of facilities exceeded $50,000, (now $10 million for
certain transactions due to EPACT 2005, see above) and must approve
such transactions if they are consistent with the public interest.
Today, one of FERCs overarching goals is to promote competition in
wholesale power markets, having determined that effective
competition, as opposed to traditional forms of price regulation,
can best protect the interests of ratepayers. Market power,
however, can be exercised to the detriment of effective competition
and exercise of market power in bulk power markets.The Final Rule
adopts the proposal in the Blanket Authorization NOPR to
pre-authorize a public utility to dispose of less than 10 percent
of its voting securities to a public utility holding company if,
after the disposition, the holding company and any associate or
affiliate companies in aggregate will own less than 10 percent of
the outstanding voting interests of that public utility. Based on
comments to the Blanket Authorization NOPR, the Final Rule also
provides four additional blanket authorizations under section
203(a)(1). Market power can be created or enhanced by mergers.
Mergers can eliminate a competitor from the market and concentrate
control of generating assets. Mergers can also enhance vertical
market power, by giving the merged company a new or increased
ability or incentive to restrict inputs to power production. The
Commission considers market power issues in reviewing applications
for mergers or other jurisdictional acquisitions or dispositions of
assets. If a merger will create market power or enhance the
applicants market power significantly, mitigation of these effects
is required in order to ensure that the merger is consistent with
the public interest. Section 203 of the FPA provides that FERC
approval is required for transactions in which a public utility
disposes of jurisdictional facilities, merges such facilities with
facilities owned by another person, or acquires the securities of
another public utility. Under the statute, FERC must find that the
proposed transaction will be consistent with the public interest.
The filing requirements under review and define the terms of
information necessary to investigate the possible impact of the
proposed transaction on public interest. The basis for current
practices with respect to Section 203 applications is Federal Power
Commission Opinion No. 507 issued in the 1966 Commonwealth Edison
Company, proceeding, 36 FPC 907. In that proceeding FERC set forth
the criteria to be applied when determining whether the proposed
transaction is consistent with the public interest. This proposed
rule proposes codification of a limited blanket authorization under
FPA section 203(a)(1), providing for a category of jurisdictional
transactions under section 203(a)(1) for which the Commission would
not require applications seeking before-the-fact approval.
US Code:
16
USC 824b Name of Law: Federal Power Act
PL: Pub.L. 109 - 58 1289 Name of Law: Energy
Policy Act of 2005
On behalf of this Federal agency, I certify that
the collection of information encompassed by this request complies
with 5 CFR 1320.9 and the related provisions of 5 CFR
1320.8(b)(3).
The following is a summary of the topics, regarding
the proposed collection of information, that the certification
covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a
benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control
number;
If you are unable to certify compliance with any of
these provisions, identify the item by leaving the box unchecked
and explain the reason in the Supporting Statement.
Press Release RM07-21-000.doc
Application Under Federal Power Act Section 203,