DealLawyers.com Blog

December 12, 2005

FERC Adopts New Utility Merger Rules

Last Thursday, the Federal Energy Regulatory Commission adopted new rules governing how the agency will conduct utility merger reviews. These new rules were required when PUHCA was repealed this summer – and they improve on the FERC’s initially proposed rules which were maligned because they would have applied to all utility holding companies, thereby expanding the reach of PUHCA’s costly regulations (such as book and records requirements).

Congress’ energy bill from August required the FERC to issue new rules by December 8th and stipulated that the rules take effect on February 8th, 2006. Congress’ law no longer bars outside investors – and it replaced the SEC as the primary regulatory gatekeeper in utility M&A.

The new rules grant the FERC access to the books and records of holding companies – but some entities will be able to rely on exemptions from having to turn over books and records. The FERC will grant other exemptions and waivers on a case-by-case basis. Those that are not exempted will have until January 1, 2007 to comply with FERC’s new record-retention requirements and accounting requirements. Here is a law firm memo on the new rules.