Urging the Federal Energy Regulatory Commission to Modify Its
Policy of Reviewing Proposed Mergers of Electric Utilities so That Customers
Are Adequately Insulated From Mergers Which Are Either Anti-competitive in
Nature or Do Not Provide Positive, Net Benefits Directly to Customers

WHEREAS, the Federal Regulatory commission (“Commission” or “FERC”) is charged with regulating wholesale and interstate electric transactions in a manner consistent with the public interest; and

WHEREAS, consistent with the public interest, all rates and changes associated with the transmission or sale of electric energy subject to the jurisdiction of the commission, as well as all rules and regulations affecting or relating to such rates and charges, shall be just and reasonable; and

WHEREAS, proposed mergers with potentially anti-competitive effects should be approved only if the efficiencies, guaranteed by the applicants in the form of rate reductions to all customers, outweigh any harm to competition. In addition, conditions should be imposed on the post-merger entity that reliably mitigate the anti-competitive effects of the merger; and

WHEREAS, FERC should closely scrutinize asserted savings claims and discount savings which: are otherwise achievable without the merger; are not properly quantified; and the applicant does not propose to bear the risk of non-achievement; and

WHEREAS, FERC should immediately undertake an investigation of previously approved mergers to determine whether the claimed savings actually were realized, and if so, whether customers received the savings; and

WHEREAS, FERC should modernize its policy of evaluating mergers to properly recognize the existence of entry barriers which stem form the historical role of utilities as a government protected sole provider of service; and

WHEREAS, the commission’s merger policy should protect competition, not specific competitors; and

WHEREAS, the procedure for handling mergers should be adjusted so as to permit meaningful review by interested parties in advance of the deadline for intervention/newsroomotest. This would include additional time for parties to conduct discovery and analyze the merger applications; and

THEREFORE, BE IT RESOLVED, that the National Association of State Utility Consumer Advocates calls upon the FERC to modify its current merger policy so as to assure that customers directly benefit from any merger; and

BE IT FURTHER RESOLVED, that FERC should modify its procedural rules to permit adequate time for an evaluation of a merger prior to deadlines for intervention/newsroomotest.

BE IT FURTHER RESOLVED, that NASUCA authorizes the Executive Committee to develop specific positions and take further actions consistent with the contents of this resolution. The Executive Committee shall inform the membership of such positions and actions prior to proceeding with them, if at all possible. In any event, the Executive Committee will advise the membership of any actions taken consistent with the recommendation contained herein.

Approved by NASUCA:

Submitted by: NASUCA Electricity Committee

Chicago, Illinois

June 26, 1996

Committee Members:

Frederick J. Schmidt (NV), Chair
Rajnish Barua (DE)
Paul Buckley (MD)
Barry Cohen (OH)
Nancy Vaughn Coombs (SC)
Steven Corneli (MN)
George Dean (MA)
Margaret Force (NC)
Larry Frimerman (OH)
Robert Kelter (IL)
Eugene Koss (CT)
James Lewis (CO)
Lewis Mills (MO)
Thomas B. Nicholson (IN)
Mark Payne (NC)
Blossom Peretz (NJ)
William Perkins (ME)
Edward L. Petrini (VA)
Irwin A. Popowsky (PA)
Kenneth Traum (NH)
Donald Trotter (WA)