The U.S. Federal Energy Regulatory Commission has streamlined its utility merger policy to allow more competition.
The rules, which will simplify and expedite merger applications, are important to both gas and electric firms as mergers proliferate. FERC said it will focus on three factors to see if mergers are in the public interest: the effect on competition, rates, and on state and federal regulation.
It will use Justice Department/Federal Trade Commission merger guidelines to determine if a merger will result in an increase in market power.
FERC said its analysis of a merger's effect on competition will more precisely identify geographic and product markets and attempt to quickly identify mergers that will not require hearings on the competition issue.
In looking at potential mergers of gas and electric companies, FERC will study competitive effects on regional markets where operations overlap.
Merger applicants must propose appropriate rate protection for customers. FERC also hopes to process complete applications in 12-15 months and will apply the new policy on pending mergers case-by-case when appropriate.
When examining a proposed merger's effect on competition, FERC will look at the relevant products, customers, other potential supplies, and market concentration statistics.
When examining the effect on rates, it said ratepayer protections could include an open season for wholesale customers to give them time to switch suppliers, hold-harmless provisions to protect wholesale customers from adverse rate effects for a significant period, and a rate freeze or rate cut.
When examining the effect on regulation, it could require applicants to follow FERC policies on affiliate transactions and to indicate whether state regulatory commissions have authority over the merger.
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