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Home / Filings / EPSA Letter Regarding FERC Orders Expanding Definition Of Affiliate

November 21, 2022

EPSA Letter Regarding FERC Orders Expanding Definition Of Affiliate

By EPSA

Dockets:  ER20-67-001, et al. and EC22-45-000

Agency:  FERC

Filing date:  November 21, 2022

Summary:

The Electric Power Supply Association (“EPSA”) respectfully submits this letter to express concerns and highlight the broader industry impacts resulting from two orders issued on October 20, 2022, by the Federal Energy Regulatory Commission (“FERC” or “Commission”), which appear to apply prospectively. The orders expand the definition of an “affiliate” and “change in control” significantly under the FERC regulations with respect to transactions involving entities with market-based rate (“MBR”) authority and entities requiring Federal Power Act (“FPA”) Section 203 approvals. Specifically, in the orders issued concurrently in Evergy Kansas Central, Inc.,  involving an MBR change in status filing, and TransAlta Energy Marketing (U.S.) Inc.,  involving an FPA Section 203 application, the Commission announced a new policy under which an investor with the right to appoint even one non-independent director to a company’s board will be deemed to have control—even where the investor holds less than 10% of the company’s voting securities. Evergy and TransAlta thus modify—without a notice-and-comment rulemaking proceeding—the longstanding presumption under FERC’s regulations that, for both MBR and FPA Section 203 purposes, an investor that, together with its affiliates, holds less than 10% of the voting securities of another company will not be deemed to possess control, or be affiliated with, such company. To address the legal and (lack of) regulatory process issues presented by the determinations in Evergy and TransAlta regarding the definitions of “affiliate” and “change in control,” the Commission should issue a notice of proposed rulemaking (“NOPR”) to give notice to all interested parties and afford them an opportunity to comment on the range of significant issues presented by this policy shift—including many important questions that are beyond the scope of these individual proceedings. To provide certainty to industry, the Commission should clarify now that the determinations related to the definition of “affiliate” and “change in control” in Evergy and TransAlta apply solely to the circumstances presented in each proceeding while a rulemaking is initiated to address these policy issues.

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