The Federal Energy Regulatory Commission has proposed a rule to ensure that certain acquisitions of public utilities by holding companies that do not influence the control of the utility do not trigger certain market-based rate requirements or cross-subsidization restrictions.

FERC is seeking public comment on a Notice of Proposed Rulemaking (NOPR) granting blanket authorization for a holding company to acquire 10 percent or more, but less than 20 percent, of a public utility, provided that the holding company files an Affirmation in Support of Exemption from Affiliation Requirements, a new FERC form. The Affirmation would ensure a holding company purchaser will not change or influence the control of the public utility. The proposed rule would exempt that public utility from certain market-based rate requirements and cross-subsidization restrictions. The new process would allow FERC to monitor and sanction entities that violate any statements made in the Affirmation.

The proposal came out of a workshop that took place in December 2008 to explore issues involving control and affiliation as they pertain to the Commission’s market-based rate requirements.

Comments on the NOPR, Control and Affiliation for Purposes of Market-Based Rate Requirements under Section 205 of the Federal Power Act and the Requirements of Section 203 of the Federal Power Act, are due 60 days after publication in the Federal Register.