FERC continued turning the mergers and acquisition (M&A) tide by approving Macquarie Infrastructure Partners' $1.59 billion acquisition of Duquesne Light Holdings Inc., while emphasizing the importance of concurrent state commission approval requirements. The deal would involve the acquisition of a public utility by a private investment firm. In its approval, FERC dismissed arguments that the Pennsylvania retail customers of Duquesne Light Co. (DLC) were at risk of cross-subsidization. FERC stated that Pennsylvania is a retail choice state and "it is not the role of this Commission to evaluate the success or failure of a state's retail choice program" and that the Pennsylvania Public Utility Commission has merger approval authority over DLC and authority to protect against cross-subsidization.
This FERC order reemphasizes the importance of state commission approval considerations when parties contemplate M&A activity involving a public utility, especially in light of the New Jersey Board of Public Utilities' and Maryland Public Service Commission's impact on the proposed Exelon/PSEG and FPL/Constellation mergers, respectively.
(Docket No. EC06-160)