Industries Mergers and Sections 201 and 203 Transactions
|February 18, 2016 - Item: E-1: FERC Approves FirstEnergy East Operating Companies’ Plan to Create Stand-Alone Transmission Company Decision|
The Commission is responsible for determining whether merger and corporate applications are consistent with the public interest. In making its determination, the Commission examines a merger’s effect on competition, rates and regulation, and the potential for cross-subsidization. The Commission's screening approach to mergers, reviews for horizontal competitive concerns, and establishes guidelines for vertical competitive analysis, and establishes filing requirements for mergers that potentially raise vertical market power concerns.
Section 201(e) of the Federal Power Act (FPA) defines a public utility for purposes of Part II and Part III of the FPA as:
- Any person who owns or operates facilities subject to the jurisdiction of the Commission under this Part (other than facilities subject to such jurisdiction solely by reason of section 206(e), 206(f), 210, 211, 211A, 212, 215, 216, 217, 218, 219, 220, 221, or 222 [16 USCS § 824e(e), 824e(f), 824i, 824j, 824j-1, 824k, 824o, 824p, 824q, 824r, 824s, 824t, 824u, or 824v]).
Section 203(a) of the FPA provides, in pertinent part, that:
- 203(a)(1):“No public utility shall, without first having secured an order of the Commission authorizing it to do so:
- Sell, lease, or otherwise dispose of the whole of its facilities subject to the jurisdiction of the Commission, or any part thereof of a value in excess of $10,000,000;
- Merge or consolidate, directly or indirectly, such facilities or any part thereof with those of any other person, by any means whatsoever;
- Purchase, acquire, or take any security with a value in excess of $10,000,000 of any other public utility; or
- Purchase, lease or otherwise acquire an existing generation facility—(i) that has a value in excess of $10,000,000; and (ii) that is used for interstate wholesale sales and over which the Commission has jurisdiction for ratemaking purposes.”
- 203(a)(2) “No holding company in a holding company system that includes a transmitting utility or an electric utility shall purchase, acquire, or take any security with a value in excess of $10,000,000 of, or, by any means whatsoever, directly or indirectly, merge or consolidate with, a transmitting utility, or an electric utility company, or a holding company in a holding company system that includes a transmitting utility, or an electric utility company, with a value in excess of $10,000,000 without first having secured an order of the Commission authorizing it do so.”
- 203(a)(4) “. . . ., the Commission shall approve the proposed disposition, consolidation, acquisition, or change in control, if it finds that the proposed transaction will be consistent with the public interest, and will not result in cross-subsidization of a non-utility associate company or the pledge or encumbrance of utility assets for the benefit of an associate company unless the Commission determines that the cross-subsidization, pledge or encumbrance will be consistent with the public interest.”