FERC must fix its electric utility merger policy

Journal Article · Tue Oct 01 04:00:00 EDT 1996 · Electricity Journal

DOI:https://doi.org/10.1016/S1040-6190(96)80433-7· OSTI ID:486398

Grankena, M ^[1]

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1. Economists Inc., Washington, DC (United States)

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.

• OSTI ID: 486398
• Journal Information: Electricity Journal, Journal Name: Electricity Journal Journal Issue: 8 Vol. 9; ISSN ELEJE4; ISSN 1040-6190
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
COMPETITION
CONFLICTS OF INTEREST
DEREGULATION
ELECTRIC POWER INDUSTRY
ELECTRIC UTILITIES
MONOPOLIES
REGULATIONS
US FERC