FERC Begins Inquiry, Gives Guidance in "Primergy" Order

Fortnightly Magazine - April 1 1996
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The Federal Energy Regulatory Commission (FERC) has announced that it will revisit its 30-year old electric utility merger policy (Docket No. RM96-6-000). The Notice of Inquiry (NOI), Merger Policy Under the Federal Power Act, also orders an expedited hearing on the proposed merger between Wisconsin Electric Power Co. (WEPCO) and Northern States Power Co. (NSP) to form "Primergy" (Docket Nos. EC95-16-000, ER95-1357-000, and ER95-1358-000).

The NOI requests comments on how to evaluate proposed mergers in an open-access environment, noting that several commenters on the open-access Notice of Proposed Rulemaking argued that the FERC's current Commonwealth factors should be updated [Commonwealth Edison Co., 36 FPC 927(1996), aff'd sub nom. Utility Users League v. FPC, 394 F.2d 16 (7th Cir.1968), cert. denied, 393 U.S. 953 (1968)]. That case set forth six nonexclusive evaluation factors. However, the FERC attributes the commenters' concerns to the possibility that mergers may create "mega-utilities" that will enjoy market power in generation (em particularly if they are able to avoid the pancaked transmission rates their competitors must pay.

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