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Responses to FERC Inquiry Evidence Division Among Industry Stakeholders

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WASHINGTON, D.C., December 8, 2016 - Last week, interested parties responded to a Federal Energy Regulatory Commission (FERC) Notice of Inquiry (NOI) requesting comment on whether the agency should revise its approach to assess market power for transactions under section 203 of the Federal Power Act (FPA) and applications for market-based rate authority under section 205.

“The comments offered by stakeholders reflect starkly different views on the appropriate scope of FERC’s review of market power issues,” said Partner Jay Ryan. “Industry groups representing publicly held utilities and energy suppliers generally support FERC’s existing market power review process. In contrast, parties representing not-for-profit rural, state, municipal, or locally-owned utilities, as well as those representing end-users of electricity, are arguing in support of a more comprehensive FERC review process.”  

The parties that provided comments for the NOI included energy industry trade groups, corporations, and government agencies, including the Federal Trade Commission (FTC) and the Department of Justice (DOJ). 

The Antitrust Division of the DOJ and the FTC, the two federal agencies with primary responsibility for enforcing the antitrust laws, filed joint comments. These agencies recommend that FERC follow an analytical approach to assessing market power that more closely mirrors the competitive analysis applied in DOJ and FTC merger investigations.

FERC currently has three Commissioners, who are all Democrats. As a result of the election, the makeup of the Commission will change dramatically with President-elect Trump likely to appoint three Republicans and designate a new Chairman relatively early in his term. 

“Consequently, there is a great deal of uncertainty regarding whether FERC will take any action to revise or modify its current process for identifying and assessing market power issues,” said Partner Brooksany Barrowes. “Nevertheless, the potential for change exists and the implications could be significant if additional regulatory burdens are imposed on transactions in the electricity sector.”

Baker Botts will provide additional updates as warranted and the Antitrust and Energy Regulatory practices can provide more information upon request.

 

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