On February 21, 2008, FERC denied requests for clarification and reconsideration of the July 2007 Supplementary Policy Statement which provided additional guidance on FERC's 1996 Merger Policy Statement and the implementation of FPA Section 203 requirements under the Energy Policy Act of 2005.
In particular, FERC denied a request to broaden the categories of secondary market transactions that would not require an FPA Section 203(a)(1)(A) authorization. One commenter argued that transfers of interests in a public utility or public utility holding company through secondary market transactions should not require an FPA Section 203(a)(1)(A) authorization if (i) the securities are regularly traded but are not necessarily traded at a volume of thousands of shares per day on a public exchange and (ii) the public utility or its holding company may review proposed transactions in advance and play a ministerial role in approving the transactions but is not a party to them. FERC determined that this type of secondary market transaction does not meet the standard established in the Supplemental Policy Statement in which FERC clarified that no Section 203(a)(1)(A) approval is necessary where (1) the common stock is publicly traded, (2) huge volumes may change ownership every day between third-party investors in arm's length transactions, (3) neither the holding company nor its public utility subsidiaries are parties to the transactions, (4) neither the holding company nor its public utility subsidiaries have any control over transfers of the common stock, and (5) neither the holding company nor its public utility subsidiaries are required to be given prior notice of these transactions.
For More Information
Follow these links for additional reports on actions taken by the Federal Energy Regulatory Commission at its February 21, 2008 meeting: