A new FERC policy for electric utility mergers

Journal Article · Tue Dec 31 04:00:00 EST 1996 · Energy Law Journal

OSTI ID:441574

Moot, J S

Section 203 of the FPA provides the FERC with significant authority to shape the future structure of the electric utility industry. The FERC should exercise this authority prudently, with due regard to the reality that competition works better than regulation. For the FERC, this means carefully selecting the type of regulation it pursues. Second guessing whether a particular merger makes good business sense or will create a more efficient firm are matters particularly ill-suited to the regulatory process. These decisions can generally be left to utility executives and shareholders. Competition will be more than adequate to discipline any mergers that do not live up to expectations. The goal should be to ensure that competition will remain a disciplining force following a merger. This means carefully considering the potential competitive impacts of a merger. In doing so, however, the FERC must remain cognizant of the interplay between its merger review standards and its other policies. FERC decisions regarding transmission pricing and future market institutions (such as Poolcos) will have a significant impact on the size and nature of markets. This, in turn, will affect the degree to which particular mergers may, or may not, harm competition. The FERC`s merger policies must not only be rational and clearly articulated, but coordinated with its other policies to achieve the common goal of more efficient bulk power markets.

• OSTI ID: 441574
• Journal Information: Energy Law Journal, Journal Name: Energy Law Journal Journal Issue: 1 Vol. 17; ISSN 0270-9163; ISSN ELJOEA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
COMPETITION
DEREGULATION
ELECTRIC POWER INDUSTRY
REGULATORY GUIDES
STRUCTURE-ACTIVITY RELATIONSHIPS
US FERC