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Score a Deal? 20-Odd Mergers in Search of a Policy

Fortnightly Magazine - January 15 1999

FERC's Policy on Electric Mergers: A Bit of Perspective," 18 Energy Law Journal 113 (1997).

3 "Making the Transition from Regulation to Competition: Thinking About Merger Policy During the Process of Electric Power Restructuring," address by Joel I. Klein, assistant attorney general, U.S. Dept. of Justice, Antitrust Division, at the FERC Distinguished Speaker Series, Jan. 21, 1998. The APPA and NRECA later petitioned the FERC for a moratorium.

4 Britain's National Grid PLC's agreement to purchase the New England Electric system is another merger that will test the limitations of FERC's merger guidelines. The $4.6 billion deal was announced December 15.

5 Order No. 592, Docket No. RM96-6-000, Dec. 18, 1996, FERC Stats. & Regs. ¶31,044.

6 Notice of Proposed Rulemaking, FERC Docket No. RM98-4-000, Apr. 16, 1998.

7 Case 96-E-0897, July 15, 1998, 188 PUR4th 149 (N.Y.P.S.C.).

8 Naeve also represents Western Resources Inc. before the FERC in its effort to merge with Kansas City Power & Light Co.

9 Economic capacity minus the capacity needed to serve native load customers. ("Economic" capacity denotes resources that can be supplied and delivered to a given destination market, after paying for all transmission and ancillary services, at a price no higher than 5 percent above the pre-merger market price for that market.)

10 Capacity not already committed to long-term firm sales, but including capacity acquired by long-term firm purchases.

11 Some merger opponents complained unsuccessfully that San Diego Gas & Electric Co. held the only NOx emission allowances available in the San Diego Air Pollution District, and thus enjoyed monopoly power in generation. The Natural Resources Defense Council has raised the same issue in comments it filed in FERC Docket No. RM98-4-000, that the commission should consider availability of environmental permits when it analyzes market power in merger reviews.

12 Whether the Ohio PUC will ever review the AEP/CSW deal is problematic. The application by AEP and CSW indicates the parties will file for state review only in Texas, Oklahoma, Arkansas and Louisiana - the states of operation of the CSW subsidiaries that AEP would acquire.

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