Corporations will need FERC approval for a merger simply because they own paper assets that qualify as utility property.
In three companion orders issued April 30, 1997, the Federal Energy Regulatory Commission tried to stake out new jurisdictional turf. It attempted to expand its jurisdiction under section 203 of the Federal Power Act to cover "convergent" mergers and reorganizations involving electric utility holding companies and power marketers. Examination of the orders reveals a mighty effort by FERC to come to grips with the protean nature of what we mean by the term "public utility."
We used to know what a "public utility" was: a vertically integrated business, serving as the producer, transmitter and distributor of electricity within a defined geographic territory. This definition is not universally true any more. Now we have "quasi-utilities" that provide only one or two of these services. The open-access world also has produced "virtual utilities," marketers who trade in electricity without owning or controlling any of the physical facilities needed for production, transmission or distribution.
The three new rulings FERC issued were: Enova Corp. and Pacific Enterprises %n1%n; Morgan Stanley Capital Group Inc. %n2%n; and NorAm Energy Services Inc. %n3%n The cases are especially significant for some corporations that do not resemble traditional utilities. Such firms will find that the new rulings require them to obtain approval from the FERC for a merger, restructuring or any other reorganization if they own any "public utility" assets. This category of assets may include the contracts, books and records owned by a power marketer. It won't matter that a utility itself is not being merged or reorganized. Nor that the deal involves only a power marketer's "paper assets."