More than a year and a half after commissioners Hoecker and Massey first raised eyebrows in various concurring and dissenting opinions by suggesting changes in the merger approval process for electric utilities, the Federal Energy Regulatory Commission (FERC) on December 18 issued Order 592, a "policy statement" designed to "update and clarify" the criteria it will use to ensure that mergers remain consistent with the public interest.
Backing away from the historical six-part merger approval test established in 1966 in the Commonwealth Edison case, the FERC announced that it would approve mergers based instead on three factors: The effect of the merger on competition, on customers (wholesale rates for instance), and on regulation (e.g., conflicts with state regulation, or with the Securities and Exchange Commission arising out of the Ohio Power doctrine). As expected, the new policy introduces antitrust law principles into the merger approval process, by in effect adopting the Merger Guidelines developed by the U.S. Department of Justice, reflecting the electric industry's recent concern with designing a framework for competition.