Expanding the Ferc's Jurisdiction to Review Utility Mergers

Abstract

This law review examines in detail an emerging gap for evaluating anticompetitive concerns of utility consolidations between the Federal Energy Regulatory Commission under the Federal Power Act and the Securities and Exchange Commission under the Public Utilities Holding Company Act. First, this article presents the relevant analytical frameworks for examining horizontal and affiliate consolidations and explains why it is appropriate to apply strict scrutiny to the former and light scrutiny to the latter. Second, this article examines the dual regulatory framework for public utilities Congress established in the 1930's. This article then examines the analysis the SEC applies to horizontal intercorporate holding company mergers and that the FERC applies to affiliate mergers under FPA section 203. Next, the article presents a case study of the merger between Iowa Public Service Company and Iowa Power Company to illustrate how utilities may use both Congress' dual regulatory scheme and economic theory to escape strict agency review of the effect of a proposed merger. Finally, this article concludes that the best way to close this gap is to pass S.544 and transfer regulatory authority of PUHCA from the SEC to the FERC.

Keywords: PUHCA, Federal Power Act, FERC, SEC, Mergers

JEL Classification: K21, K22, K23, L51, L94