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Title: FERC must fix its electric utility merger policy

Abstract

In evaluating mergers, FERC should adopt the approach of the federal antitrust agencies to prevent firms from gaining and exercising market power. Doing so will require changes in everything from how FERC defines product and geographic markets, and how market concentration, entry conditions and cost saving are evaluated, to how discovery is conducted - in short, to virtually every aspect of how FERC reaches a merger decision. Reliance on competition to benefit consumers carries with it the necessity to preserve competition that is threatened by mergers or other structural changes. Faced with numerous mergers of large and medium-size electric utilities and the expectation of more to come, in January 1996 the Federal Energy Regulatory Commission requested comments on how it should evaluate mergers. This paper addresses that need. Section I explains how FERC and the federal antitrust agencies have responded to the competitive issues raised by utility mergers during the past decade. Section II introduces the analytical approach used by the antitrust agencies to evaluate mergers. Section III highlights features of the electric power industry that make analysis of market power unusually complex. Section IV evaluates FERC`s past reliance on comparable open access transmission as a sufficient remedy for competitivemore » concerns relating to the availability, reliability and pricing of transmission service. Section V suggests changes to FERC`s merger policy that would make it consistent with antitrust principles and FERC`s public interest responsibilities. The final section draws conclusions.« less

Authors:
 [1]
  1. Economists Inc., Washington, DC (United States)
Publication Date:
OSTI Identifier:
486398
Resource Type:
Journal Article
Journal Name:
Electricity Journal
Additional Journal Information:
Journal Volume: 9; Journal Issue: 8; Other Information: PBD: Oct 1996
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING AND POLICY; ELECTRIC POWER INDUSTRY; COMPETITION; ELECTRIC UTILITIES; REGULATIONS; US FERC; DEREGULATION; CONFLICTS OF INTEREST; MONOPOLIES

Citation Formats

Grankena, M. FERC must fix its electric utility merger policy. United States: N. p., 1996. Web. doi:10.1016/S1040-6190(96)80433-7.
Grankena, M. FERC must fix its electric utility merger policy. United States. https://doi.org/10.1016/S1040-6190(96)80433-7
Grankena, M. 1996. "FERC must fix its electric utility merger policy". United States. https://doi.org/10.1016/S1040-6190(96)80433-7.
@article{osti_486398,
title = {FERC must fix its electric utility merger policy},
author = {Grankena, M},
abstractNote = {In evaluating mergers, FERC should adopt the approach of the federal antitrust agencies to prevent firms from gaining and exercising market power. Doing so will require changes in everything from how FERC defines product and geographic markets, and how market concentration, entry conditions and cost saving are evaluated, to how discovery is conducted - in short, to virtually every aspect of how FERC reaches a merger decision. Reliance on competition to benefit consumers carries with it the necessity to preserve competition that is threatened by mergers or other structural changes. Faced with numerous mergers of large and medium-size electric utilities and the expectation of more to come, in January 1996 the Federal Energy Regulatory Commission requested comments on how it should evaluate mergers. This paper addresses that need. Section I explains how FERC and the federal antitrust agencies have responded to the competitive issues raised by utility mergers during the past decade. Section II introduces the analytical approach used by the antitrust agencies to evaluate mergers. Section III highlights features of the electric power industry that make analysis of market power unusually complex. Section IV evaluates FERC`s past reliance on comparable open access transmission as a sufficient remedy for competitive concerns relating to the availability, reliability and pricing of transmission service. Section V suggests changes to FERC`s merger policy that would make it consistent with antitrust principles and FERC`s public interest responsibilities. The final section draws conclusions.},
doi = {10.1016/S1040-6190(96)80433-7},
url = {https://www.osti.gov/biblio/486398}, journal = {Electricity Journal},
number = 8,
volume = 9,
place = {United States},
year = {Tue Oct 01 00:00:00 EDT 1996},
month = {Tue Oct 01 00:00:00 EDT 1996}
}