A group representing municipal- and government-owned utilitieslast week renewed its call for FERC to impose a moratorium onelectric utility mergers that threaten competition while theindustry is undergoing transition. At a minimum, it proposed thatthe Commission only approve mergers that could show “clearbenefits” that would result from such combinations.

The American Public Power Association (APPA) suggested thiscourse in its comments on the Commission’s notice of proposedrulemaking that seeks to update the merger requirements for theutility industry [RM98-4]. The APPA, which along with the NationalRural Electric Cooperative Association first proposed a moratoriumlast April, was joined in its remarks this time by the TransmissionAccess Policy Study Group (TAPS), an informal group of municipal,cooperative and investor-owned utilities.

“We continue to believe that a moratorium, which the Commissionhas ample authority to order, is the best means to safeguard thepublic interest in this period of drastic change.,” the APPA andTAPS noted. In the event FERC should reject the moratorium idea,”mergers should be approved during restructuring, when to aconsiderable extent the Commission will be largely operating in thedark, only if there is a convincing showing of clear benefitsachievable only by the merger.”

Moreover, they asked FERC to condition all mergers “to ensureCommission authority to re-open the merger approval where necessaryto protect the public interest and to impose fiscal disincentivesto future anticompetitive actions, as well as to ensurecomparability.”

The APPA and TAPS applauded the proposed updated filingrequirements, but they noted their mere existence was not enough -they needed to be enforced to the letter. “Absent rigorousenforcement, the rationale for filing requirements is defeated andmerger review ends up sapping all too much of the limited resourcesof all participants, including the Commission and its staff.”

As part of their remarks, the two groups also chided FERC forfocusing too much attention on the bulk-power markets and ignoringthe retail markets. “…[T]he Commission has the statutoryauthority and responsibility to consider and address competitionthat can be expected to arise in the context of retail choice. Theplain fact that competitive conditions at retail affect and, withthe advent of retail choice, become inextricably intertwined withmulti-state wholesale markets demonstrates that retail competitioncannot be ignored.”

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