A Regulator’s Guide to Electric Mergers and Acquisitions in Florida
- Topics:
- Investment Strategy
- Tags:
- Benefit,
- FERC,
- Finance,
- Investment,
- M&A,
- Merger,
- Mergers & Acquisitions,
- Regulator
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Overview: This article asserts that mergers and acquisitions are occurring in many industries in the U.S., especially in the electric power industry. The trend toward consolidation most likely will increase as the industry becomes more competitive. The objective of this working paper is to identify who has authority to approve mergers and acquisitions and the benefits associated with state and federal regulators possessing authority over current and future mergers and acquisitions within a state. Federal and State Regulators have several roles in reviewing mergers and acquisitions. The FERC has approved about 45 mergers in the past four years in an average of 117 days each. The Federal Power Act grants the FERC authority over mergers involving electric utilities engaged in interstate commerce when the utility sells electric power for resale, supplies unbundled transmission service, or owns hydroelectric facilities. The FERC considers four primary factors in analyzing proposed mergers. It is usual for many promises to be made by the two merging parties before a merger or acquisition is exercised. This naturally increases potential problems for the companies, and their respective PUCs, in allocating cost savings and other benefits. Each jurisdiction will strive to claim the most benefits to their native state, while possibly minimizing the allocation of any merger related benefits to the foreign state. This could be detrimental to a state that does not possess merger approval authority.
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Format: PDF | Size: 30KB | Date: Aug 2001 | Pages: 8
