At its November 20, 2008 meeting, the Federal Energy Regulatory Commission (FERC) approved an order related to acquisitions of securities by public utility holding companies that clarifies one type of change in facts that should in all cases be the subject of a notification filing.1 Specifically, FERC clarified that if a holding company that has previously filed an exemption or waiver notification, i.e., FERC-65A or FERC-65B, or that has received an exemption or waiver through a declaratory order, becomes a holding company with respect to an additional public-utility company or holding company of any public-utility company (i.e., obtains the power to vote 10 percent or greater of the voting securities of an additional company), that holding company should file with FERC a notification of material change in facts that describes the additional public utility company or holding company of any public-utility company. The holding company must also comply with the requirements of Section 366.4(d)(1) of FERC's regulations by selecting one of the three possible courses of action set forth in that section, i.e., (i) submit a new FERC-65A or FERC-65B or petition for declaratory order, (ii) file a written explanation why the material change in facts does not affect the exemption or waiver or, (iii) notify FERC that it no longer seeks to maintain its exemption or waiver. FERC explains that the purpose of the notice filing is, in part, to inform FERC and the public of material changes in fact. "[T]he addition of a new subsidiary company that is a public-utility or holding company of a public-utility company,"2 in FERC's view is a material change in fact even if it does not cause the status of the holding company under the Public Utility Holding Company Act of 2005 (PUHCA 2005) to change.
FERC clarified that the notification filing must be made regardless of whether a change has occurred with respect to the basis on which the exemption or waiver was granted. For example, if a holding company received an exemption from the PUHCA 2005 regulations on the basis of its status as a passive investor of the type identified in 18 C.F.R. § 366.3(b)(2)(i), it must still notify FERC whenever it acquires, as a passive investor, interests in an additional public-utility company or holding company that, upon acquisition, becomes a "subsidiary company," as defined in 18 C.F.R. § 366.1, of the passive investor. That is, a notification filing is required even if the holding company continues to qualify for an exemption as a passive investor.
Because not all holding companies may have been interpreting FERC's regulations to require notification filings where the basis on which their exemption or waiver was granted has not changed, and because FERC has not previously clarified this requirement for notifications of material changes in fact, FERC is allowing all such companies to file within 45 days of the date of publication of its order in the Federal Register a notification of change in material facts that updates FERC on any investments of 10 percent or more of the voting securities of a public-utility company or holding company of a public-utility company since the time the exemption or waiver was granted. On a going forward basis, FERC's regulations require notification filings to be made within 30 days of the material change.
The failure to notify FERC within 45 days of any changes that have occurred since the time an exemption or waiver was granted or within 30 days of any prospective changes may result in the imposition of sanctions.
- Click here for complete order (PDF)