The Federal Energy Regulatory Commission (FERC) is considering whether to incorporate into its traditional horizontal market power analysis certain facets of the 2010 Horizontal Merger Guidelines (2010 Guidelines) adopted by its sister agencies, the Department of Justice and the Federal Trade Commission (Antitrust Agencies).1 Any change would impact the FERC’s consideration of: (1) disposition, acquisition or merger transactions; and (2) the agency’s electric market-based rate program. Comments must be submitted to the FERC by May 23, 2011.  

FPA Section 203

Today, the FERC assesses the effect on competition of a proposed disposition, acquisition or merger by applying the Herfindahl-Hirschman Index (HHI) thresholds reflected in the Antitrust Agencies’ 1992 Guidelines.2 Through the NOI, the FERC seeks comment on:

  • Whether it should adopt the 2010 Guidelines’ approach of placing less emphasis on “use of a prescribed formula” and apply a more “fact-specific inquiry;”
  • Whether it should adopt the increased HHI thresholds reflected in the 2010 Guidelines;3
  • Whether it should adopt other facets of the 2010 Guidelines such as provisions addressing the potential competitive effects of partial acquisition and minority ownership arrangements;4
  • If so, what elements it should adopt and how should they be incorporated into its analysis;
  • Whether the differences between the FERC and Antitrust Agencies review processes should affect whether to adopt any portion of the 2010 Guidelines.5

FPA Section 205

Today, the FERC will grant authority to sell electric power at market-based rates if the seller, among other things, has less than a 20 percent wholesale market share in the relevant market. Otherwise the FERC will assess horizontal market power consistent with prior DOJ standards. Through the NOI, the FERC asks what impact, if any, the 2010 Guidelines should have on its horizontal market power analysis for electric market-based rates.

If the outcome of the NOI leads to FERC issuance of proposed rules, it could have significant impacts on the electric power industry.