Mergers and Acquisitions in the US Electricity Industry: State Regulatory Policies for Reviewing Today's Deals

Mon Jan 01 15:24:38 EST 2007
By Dr. Karl McDermott and Carl Peterson

The debate over the appropriate structure for the electric industry in the US has been the subject of legislation, policymaking, and litigation for years. With the introduction of competition in the wholesale and retail markets for electricity, regulated firms and holding companies of regulated firms are struggling to adjust to new conditions and exploit new opportunities created by changes in government policy toward the industry. In this article from The Electricity Journal, NERA Special Consultants Dr. Karl McDermott and Dr. Carl Peterson evaluate recent regulatory review of mergers in the context of the changing structure of the industry. While almost all mergers require approval from multiple regulatory agencies -- including the US Federal Energy Regulatory Commission and the US Federal Trade Commission/US Department of Justice -- the authors focus on the regulatory approval process at the state level, generally before a state public utility commission (PUC). Dr. McDermott and Mr. Peterson review the types of mergers and their benefits and costs, addressing the state PUC merger review obligations in the context of regulation as well as the conditions that have been placed on mergers.