122 FERC ¶ 61,156 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 33 

[Docket No. RM07-21-000; Order No. 708] 

Blanket Authorization Under FPA Section 203 

(Issued February 21, 2008) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Final Rule. 

SUMMARY: The Federal Energy Regulatory Commission (Commission) is amending 

its regulations pursuant to section 203 of the Federal Power Act (FPA) to provide for 

additional blanket authorizations under FPA section 203(a)(1). These blanket 

authorizations will facilitate investment in the electric utility industry and, at the same 

time, ensure that public utility customers are adequately protected from any adverse 

effects of such transactions. 

EFFECTIVE DATE: This Final Rule will become effective [Insert_Date days after 

publication in the FEDERAL REGISTER]. 

FOR FURTHER INFORMATION CONTACT: 

Carla Urquhart (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8496
Docket No. RM07-21-000 - 2 - 

Roshini Thayaparan (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6857

David Hunger (Technical Information) 

Office of Energy Market Regulation 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-8148

Andrew P. Mosier, Jr. (Technical Information) 

Office of Energy Market Regulation 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

(202) 502-6274

SUPPLEMENTARY INFORMATION: 
122 FERC ¶ 61,156 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Joseph T. Kelliher, Chairman; 

 Suedeen G. Kelly, Marc Spitzer, 

 Philip D. Moeller, and Jon Wellinghoff. 

 

Blanket Authorization Under FPA Section 203 Docket No. RM07-21-000 

ORDER NO. 708 

FINAL RULE 

(Issued February 21, 2008) 

1. On July 20, 2007, the Commission issued a Notice of Proposed Rulemaking1

 to 

provide for an additional blanket authorization under section 203(a)(1) of the Federal 

Power Act (FPA).2

 After receiving comments in response to the Blanket Authorization 

NOPR, the Commission amends Part 33 of the Commission’s regulations to add five 

blanket authorizations under section 203(a)(1). In addition, this Final Rule provides 

certain clarifications regarding the existing blanket authorizations under section 203. 

Further, this Final Rule clarifies the definitions of the terms “affiliate” and “captive 

customers.” These blanket authorizations and clarifications will facilitate investment in 

 1

 Blanket Authorization Under FPA Section 203, Notice of Proposed Rulemaking, 

72 FR 41640 (July 31, 2007), FERC Stats. & Regs. ¶ 32,619 (2007) (Blanket 

Authorization NOPR). 

2

 16 U.S.C. 824b. 
Docket No. RM07-21-000 - 2 - 

the electric utility industry and, at the same time, ensure that public utility customers are 

adequately protected from any adverse effects of such transactions. 

I. Background

2. The Energy Policy Act of 20053

 expanded the scope of the corporate transactions 

subject to the Commission’s review under section 203 of the FPA. Among other things, 

amended section 203: (1) expands the Commission’s review authority to include 

authority over certain holding company mergers and acquisitions, as well as certain 

public utility acquisitions of generating facilities; (2) requires that, prior to approving a 

disposition under section 203, the Commission must determine that the transaction would 

not result in inappropriate cross-subsidization of non-utility affiliates or the pledge or 

encumbrance of utility assets;4

 and (3) imposes statutory deadlines for acting on mergers 

and other jurisdictional transactions. 

3. Through the Order No. 669 rulemaking proceeding, the Commission promulgated 

regulations adopting certain modifications to 18 CFR § 2.26 and Part 33 to implement 

 3

 Energy Policy Act of 2005, Pub. L. No 109-58, 1289, 119 Stat. 594, 982-83 

(2005) (EPAct 2005). 

4

 Section 203(a)(4) is not an absolute prohibition on the cross-subsidization of a 

non-utility associate company or the pledge or encumbrance of utility assets for the 

benefit of an associate company. If the Commission determines that the crosssubsidization, pledge or encumbrance will be consistent with the public interest, the 

action may be permitted. 
Docket No. RM07-21-000 - 3 - 

amended section 203.5

 The Commission also provided blanket authorizations for certain 

transactions subject to section 203. These blanket authorizations were crafted to ensure 

that there is no harm to captive customers of franchised public utilities, but sought to 

accommodate investments in the electric utility industry and market liquidity. Some 

commenters in the rulemaking proceeding argued that the Commission should have 

granted additional blanket authorizations that would benefit the marketplace and not 

harm customers. Other commenters argued that the Commission should adopt additional 

generic rules to guard against inappropriate cross-subsidization associated with the 

mergers. Yet other commenters argued that the Commission should modify its 

competitive analysis for mergers, which has been in place for 10 years. The Commission 

stated that it would reevaluate these and other issues at a technical conference on 

the Commission’s section 203 regulations as well as certain issues raised in the 

Order No. 667 rulemaking proceeding implementing the Public Utility Holding Company 

Act of 2005 (PUHCA 2005).6

 5

 Transactions Subject to FPA Section 203, Order No. 669, 71 FR 1348 (Jan. 6, 

2006), FERC Stats. & Regs. ¶ 31,200 (2005), order on reh’g, Order No. 669-A, 71 

FR 28422 (May 16, 2006), FERC Stats. & Regs. ¶ 31,214 (2006), order on reh’g, 

Order No. 669-B, 71 FR 42579 (July 27, 2006), FERC Stats. & Regs. ¶ 31,225 (2006). 

6

 EPAct 2005, Pub. L. No. 109-58, 1261, et seq., 119 Stat. 594, 972-78 (2005) 

(PUHCA 2005). See also Repeal of the Public Utility Holding Company Act of 1935 and 

Enactment of the Public Utility Holding Company Act of 2005, Order No. 667, 70 

FR 75592 (Dec. 20, 2005), FERC Stats. & Regs. ¶ 31,197 (2005), order on reh’g, 

Order No. 667-A, 71 FR 28446 (May 16, 2006), FERC Stats. & Regs. ¶ 31,213, order on 

 (continued) 
Docket No. RM07-21-000 - 4 - 

4. On December 7, 2006, the Commission held a technical conference (December 7 

Technical Conference) to discuss several of the issues that arose in the Order No. 667 and 

Order No. 669 rulemaking proceedings. The December 7 Technical Conference 

discussed a range of topics. The first panel discussed whether there are additional 

actions, under the FPA or the NGA, that the Commission should take to supplement the 

protections against cross-subsidization that were implemented in the Order No. 667 and 

Order No. 669 rulemaking proceedings. The second panel discussed whether, and if so 

how, the Commission should modify its Cash Management Rule7

 in light of PUHCA 

2005 and whether the Commission should codify specific safeguards that must be 

adopted for cash management programs and money pool agreements and transactions. 

The third panel discussed whether modifications to the specific exemptions, waivers and 

blanket authorizations set forth in the Order No. 667 and Order No. 669 rulemaking 

proceedings are warranted. Post-technical conference comments were accepted. 

 

reh’g, Order No. 667-B, 71 FR 42750 (July 28, 2006), FERC Stats. & Regs. ¶ 31,224 

(2006), order on reh’g, Order No. 667-C, 72 FR 8277 (Feb. 26, 2007), 118 FERC 

¶ 61,133 (2007). These issues included matters related to inappropriate crosssubsidization and pledges or encumbrance of utility assets, whether our current merger 

policy should be revised, and whether additional exemptions, different reporting 

requirements, or other regulatory action (under PUHCA 2005 or the FPA or Natural Gas 

Act (NGA)) needed to be considered. 

7

 Regulation of Cash Management Practices, Order No. 634, 68 FR 40500 (July 8, 

2003), FERC Stats. & Regs. ¶ 31,145, revised, Order No. 634-A, 68 FR 61993 (Oct. 31, 

2003), FERC Stats. & Regs. ¶ 31,152 (2003) (Cash Management Rule). 
Docket No. RM07-21-000 - 5 - 

5. On March 8, 2007, the Commission held a second technical conference (March 8 

Technical Conference) to discuss whether the Commission’s section 203 policy should be 

revised and, in particular, whether the Commission’s Appendix A merger analysis is 

sufficient to identify market power concerns in today’s electric industry market 

environment. The first panel discussed whether the Appendix A analysis is appropriate 

to analyze a merger’s effect on competition, given the changes that have occurred in the 

industry (e.g., the development of Regional Transmission Organizations) and statutory 

changes (e.g., as a result of the repeal of the Public Utility Holding Company Act of 

19358

 and new authorities given to the Commission in EPAct 20059). The second panel 

assessed the factors the Commission uses in reviewing mergers and the coordination 

between the Commission and other agencies (including state commissions) with merger 

review responsibility. 

6. On July 20, 2007, the Commission took three actions based on the Commission’s 

experience implementing amended FPA section 203 and PUHCA 2005, as well as the 

record from the Commission’s December 7 and March 8 Technical Conferences 

regarding section 203 and PUCHA 2005. In this docket, the Commission issued the 

 8

 16 U.S.C. 79a et seq. (PUHCA 1935). EPAct 2005 repealed PUHCA 1935. 

EPAct 2005, Pub L. No. 109-58, 1263. 

9

 These include new authorities through amended FPA section 203 as well as 

PUHCA 2005. 
Docket No. RM07-21-000 - 6 - 

Blanket Authorization NOPR, proposing an additional blanket authorization for certain 

dispositions of jurisdictional facilities under FPA section 203(a)(1) and seeking comment 

on additional blanket authorizations under section 203. In addition, in separate 

proceedings, the Commission issued a policy statement providing additional guidance 

regarding the Commission’s section 203 authority10 and a notice of proposed rulemaking 

proposing to codify restrictions on affiliate transactions between franchised public 

utilities with captive customers and their market-regulated power sales affiliates or nonutility affiliates.11

II. Blanket Authorization NOPR

7. In the Blanket Authorization NOPR, based on the record from the technical 

conferences (including both oral and written comments) and the Commission’s 

experience under amended section 203 to date, the Commission proposed to provide for a 

limited blanket authorization to public utilities under section 203(a)(1). Under this 

limited blanket authorization, a public utility would be pre-authorized to dispose of less 

than 10 percent of its voting securities to a public utility holding company but only if, 

 10 FPA Section 203 Supplemental Policy Statement, 72 FR 42277 (Aug. 2, 2007), 

FERC Stats. & Regs. ¶ 31,253 (2007) (Supplemental Policy Statement), order on 

clarification and reconsideration, 122 FERC ¶ 61,157 (2008). 

11 Cross-Subsidization Restrictions on Affiliate Transactions, 72 FR 41644 (July 

31, 2007), FERC Stats. & Regs. ¶ 32,618 (2007) (Affiliate Transactions NOPR); see

Cross-Subsidization Restrictions on Affiliate Transactions, Order No. 707 122 FERC 

¶ 61,155 (2008) (Affiliate Transactions Final Rule).
Docket No. RM07-21-000 - 7 - 

after the disposition, the holding company and any of its associate or affiliate companies 

in aggregate will own less than 10 percent of the outstanding voting interests of that 

public utility. The proposed limited blanket authorization would work in conjunction 

with the blanket authorization granted to holding companies under section 203(a)(2) in 

18 CFR 33.1(c)(2)(ii).12 The Commission noted that this proposed blanket authorization 

would not entirely parallel the section 203(a)(2) authorization since the section 203(a)(2) 

authorization does not contain the “in aggregate” limitation. However, the Commission 

stated that this limitation would provide better protection against possible transfer of 

control of a public utility. The Commission sought comment on this limitation. 

8. The Commission stated that the disposition of such limited voting interests (less 

than 10 percent), with the proposed “in aggregate” restriction and the existing reporting 

requirements applicable to holding companies,13 will not harm competition or captive 

 12 The section 203(a)(2) blanket authorization states that any holding company in a 

holding company system that includes a transmitting utility or an electric utility may 

purchase, acquire, or take “[a]ny voting security in a transmitting utility, an electric utility 

company, or a holding company in a holding company system that includes a transmitting 

utility or an electric utility company if, after the acquisition, the holding company will 

own less than 10 percent of the outstanding voting securities.” 18 CFR 33.1(c)(2)(ii). 

Because a “transmitting utility” or “electric utility company” may also be a “public 

utility” as defined in the FPA, the public utility may need to obtain separate authorization 

for the same transaction under FPA section 203(a)(1), which requires authorization for 

public utilities to dispose of jurisdictional facilities. 

13 See, e.g., 18 CFR 33.1(c)(4) (requiring the filing of Securities and Exchange 

Commission (SEC) Schedule 13D, Schedule 13G, and Form 13F, if applicable); 

18 CFR 35.42(a) (effective September 18, 2007, the effective date of Market-Based Rates 

 (continued) 
Docket No. RM07-21-000 - 8 - 

customers. Moreover, the Commission stated this 10 percent threshold is consistent with 

the definition of “holding company” under section 1262(8)(A) of PUHCA 2005. Under 

that definition, any company that has the power to vote 10 percent or more of the 

securities of a public utility company (or a holding company of a public utility company) 

triggers holding company status and thus is presumed to raise sufficient concerns about 

controlling influence over a subsidiary public utility that regulatory oversight is needed. 

The Commission also found the 10 percent threshold to be consistent with the blanket 

authorization granted under section 203(a)(2) in the Order No. 669 rulemaking 

proceeding, under which holding companies are pre-authorized to acquire up to 

9.99 percent of voting securities of a public utility. 

9. The Commission further noted that, as part of the existing “parallel” blanket 

authorization under section 203(a)(2), the Commission already requires the holding 

company to provide to the Commission copies of any Schedule 13D, Schedule 13G and 

Form 13F at the same time and on the same basis, as filed with the SEC in connection 

with any securities purchased, acquired or taken pursuant to the blanket authorization 

 

For Wholesale Sales Of Electric Energy, Capacity And Ancillary Services By Public 

Utilities, Order No. 697, 72 FR 39903 (July 20, 2007), FERC Stats. & Regs. ¶ 31,252 

(2007)) (requiring a notification of any change in status that would reflect a departure 

from the characteristics the Commission relied upon in granting market-based rate 

authority); 18 CFR 366.4(a) (requiring Form FERC-65 (notification of holding company 

status)). 
Docket No. RM07-21-000 - 9 - 

under section 203(a)(2) provided in § 33.1(c)(2) of the Commission’s regulations.14 Any 

person is required to file a Schedule 13 notification with the SEC of an acquisition of 

beneficial ownership of more than five percent of a class of equity securities.15 

Importantly, a Schedule 13G filer must acquire the subject securities “in the ordinary 

course of his business and not with the purpose nor with the effect of changing or 

influencing the control of the issuer, nor in connection with or as a participant in any 

transaction having such purpose or effect” over entities whose securities it holds.16 

Because the Commission already receives these filings from the holding company, the 

Commission proposed not to require additional reporting on the part of individual public 

utilities to duplicate the reporting of information we are already getting about the same 

transaction. However, the Commission sought comment on whether any additional 

reporting by the public utility should be required. 

10. The Commission also sought comment on whether blanket authorizations under 

section 203(a)(1) should be provided for the transfer of securities by a public utility 

to a holding company granted a blanket authorization under section 203(a)(2) in 

18 CFR 33.1(c)(8),17 33.1(c)(9),18 and 33.1(c)(10).19 In addition, the Commission 

 14 18 CFR 33.1(c)(4). 

15 17 CFR 240.13d-1(a). 

16 17 CFR 240.13d-1(b)(1)(i). 

17 18 CFR 33.1(c)(8) (granting a blanket authorization under section 203(a)(2) to a 

 (continued) 
Docket No. RM07-21-000 - 10 - 

sought comment on whether it should grant a generic blanket authorization under 

section 203(a)(1) for the acquisition or disposition of a jurisdictional contract where 

neither the acquirer nor transferor has captive customers and the contract does not convey 

control over the operation of a generation or transmission facility. 

III. Procedural Matters

11. The Blanket Authorization NOPR invited comments on the proposed regulations. 

Comments on the Blanket Authorization NOPR were filed by: American Public Power 

Association and National Rural Electric Cooperative Association (APPA/NRECA); 

Edison Electric Institute (EEI); Electric Power Supply Association (EPSA); Entergy 

Services, Inc. (Entergy); Financial Institutions Energy Group (the Financial Group); 

Mirant Corporation (Mirant); Modesto Irrigation District (Modesto); and Oklahoma 

Corporation Commission (Oklahoma Commission);. 

 

person that is a holding company solely with respect to one or more exempt wholesale 

generators (EWGs), foreign utility companies (FUCOs), or qualifying facilities (QFs) to 

acquire the securities of additional EWGs, FUCOs, or QFs). 

18 18 CFR 33.1(c)(9) (granting a conditional blanket authorization under 

section 203(a)(2) to a holding company, or a subsidiary of that company, that is regulated 

by the Board of Governors of the Federal Reserve Bank or by the Office of the 

Comptroller of the Currency, under the Bank Holding Company Act of 1956 as amended 

by the Gramm-Leach-Bliley Act of 1999). 

19 18 CFR 33.1(c)(10) (granting a limited blanket authorization under 

section 203(a)(2) to a holding company, or a subsidiary of that company, for the 

acquisition of securities of a public utility or a holding company that includes a public 

utility for purposes of underwriting activities or hedging transactions). 
Docket No. RM07-21-000 - 11 - 

IV. Discussion

12. This Final Rule adopts the proposal in the Blanket Authorization NOPR to preauthorize a public utility to dispose of less than 10 percent of its voting securities to a 

public utility holding company if, after the disposition, the holding company and any 

associate or affiliate companies in aggregate will own less than 10 percent of the 

outstanding voting interests of that public utility. Based on comments to the Blanket 

Authorization NOPR, this Final Rule also provides four additional blanket authorizations 

under section 203(a)(1). First, a public utility is granted a blanket authorization under 

section 203(a)(1) to transfer its outstanding voting securities to any holding company 

granted blanket authorization in § 33.1(c)(8) if, after the transfer, the holding company 

and any of its associate or affiliate companies in aggregate will own less than 10 percent 

of the outstanding voting interests of such public utility. Second, a public utility is 

granted a blanket authorization under section 203(a)(1) to transfer its outstanding voting 

securities to any holding company granted blanket authorization in § 33.1(c)(9). Third, a 

public utility is granted a blanket authorization under section 203(a)(1) to transfer its 

outstanding voting securities to any holding company granted blanket authorization 

in § 33.1(c)(10). Fourth, a public utility is granted a blanket authorization under 

section 203(a)(1) for the acquisition or disposition of a jurisdictional contract where 

neither the acquirer nor transferor has captive customers or owns or provides 

transmission service over jurisdictional transmission facilities, the contract does not 
Docket No. RM07-21-000 - 12 - 

convey control over the operation of a generation or transmission facility, the parties to 

the transaction are neither affiliates nor associate companies, and the acquirer is a public 

utility. In addition, this Final Rule provides certain clarifications regarding the existing 

blanket authorizations under section 203. Finally, this Final Rule clarifies the definitions 

of the terms “affiliate” and “captive customers.” 

A. Proposed Blanket Authorizations

1. Scope of the Proposed Blanket Authorization

a. Comments

13. APPA/NRECA, Mirant and the Oklahoma Commission support the limited 

blanket authorization as proposed by the Commission. The Oklahoma Commission states 

that the rule would allow utilities to expedite business ventures, but warns that the 

Commission should use terms in their plain and ordinary meanings to reduce any 

potential ambiguity. It also recommends that the Commission consider language that 

would allow state commissions to continue to receive notices of any investigations of 

regulated public utility companies. 

14. In the Blanket Authorization NOPR, the Commission asked for comments on the 

“in aggregate” limitation. APPA/NRECA support the proposed aggregate ownership 

limitation, stating that it is needed to help prevent the transfer of control of public 

utilities. They argue that omitting the “in aggregate” limitation would allow a public 

utility to sell less than 10 percent of its voting securities in successive transfers to each of 
Docket No. RM07-21-000 - 13 - 

several affiliates or associate companies (or even the same entity). APPA/NRECA 

further argues that omitting the “in aggregate” limitation is not in the public interest 

because, absent a case-by-case review, the Commission has no basis for a finding that an 

indirect transfer of control of a public utility’s generation or transmission facilities to a 

single entity or to several affiliated entities will not harm competition, captive customers, 

or transmission customers. 

15. Mirant also supports the limited blanket authorization with the “in aggregate” 

limitation. It states that while this does not completely parallel the blanket authorization 

granted in Order No. 669, it is comparable enough to remedy the problem that exists 

when one party must seek Commission review of the transaction. 

16. EEI and the Financial Group support the blanket authorization with certain 

clarifications and recommendations. Specifically, the Financial Group argues that the 

proposed less than 10 percent blanket authorization under section 203(a)(1) should be 

expanded to include all acquirers, not just holding companies. It asserts that if a 

disposition of less than 10 percent of a public utility’s voting securities to a holding 

company raises no concerns with respect to control, markets, or captive customers, then a 

disposition of less than 10 percent of a public utility’s voting securities to an entity that is 

not a holding company should also raise no concerns. The Financial Group states that, in 

the case of a disposition of less than 10 percent of the voting securities of a public utility, 

the interest being disposed of does not convey control and cannot harm markets or 
Docket No. RM07-21-000 - 14 - 

captive customers, so the status of the acquirer – as a holding company, public utility, or 

an entity that is neither – should be irrelevant. It argues that requiring a public utility to 

seek approval under section 203(a)(1) when disposing of less than 10 percent of its voting 

securities to a non-holding company would not serve any regulatory purpose, and adds 

needless costs and delays to transactions that do not raise section 203 concerns. 

17. Similarly, EEI argues that the Commission should not limit its proposed 

section 203(a)(1) blanket authorization to the entities described in 18 CFR 33.1(c)(2)(ii). 

EEI states that § 33.1(c)(2)(ii) only covers acquisitions by holding companies of 

securities of a transmitting utility, electric utility company, or holding company in a 

holding company system with such utilities. This, EEI argues, excludes a broader class 

of public utilities as well as non-holding company acquirers. It contends that the 

Commission would reduce the regulatory burden and encourage investment without 

causing harm “by extending the new blanket authorization to cover jurisdictional 

transfers of securities from the broader class of ‘public utilities’ to ‘any person’ without 

the constraints contained in [§] 33.1(c)(2)(ii).”20

18. As an additional matter, the Financial Group recommends that the Commission 

clarify that the aggregate limitation only applies to companies in a holding company 

system that are 10 percent or more owned by the holding company or its subsidiaries. It 

 20 EEI Comments at 8. 
Docket No. RM07-21-000 - 15 - 

argues that this should be clarified by eliminating the reference to “affiliate” altogether in 

the proposed definition. In the alternative, the Financial Group argues that the 

Commission clarify that the term does not refer to the PUHCA 2005 definition of 

affiliate, but rather to an entity that controls, is controlled by, or is under common control 

with, another entity (where control is rebuttably presumed to mean a voting interest of 

10 percent or more). 

b. Commission Determination

19. We will adopt the proposed blanket authorization without modification. We will 

retain the “in aggregate” limitation so that, after a disposition of a public utility’s 

securities under the proposed blanket authorization, the acquiring holding company and 

any associate or affiliate companies “in aggregate” would own less than 10 percent of the 

outstanding voting interests of that the public utility. As commenters point out, the 

limitation helps to prevent a public utility from transferring less than 10 percent of its 

voting securities in successive transfers to each of several affiliate or associate companies 

(or even the same entity), and thereby transferring control. 

20. We deny the Financial Group’s and EEI’s requests to expand the blanket 

authorization to cover not only public utility dispositions of securities to holding 

companies but also public utility dispositions of securities to “any persons.” This 

request would expand the blanket authorization proposed in the existing NOPR beyond 

its original intent, which was to ensure that transactions qualifying under the 
Docket No. RM07-21-000 - 16 - 

section 203(a)(2) blanket authorization would not have to seek approval under 

section 203(a)(1).21 In addition, limiting the blanket authorization to holding companies 

allows the Commission to monitor these dispositions for possible changes of control even 

when they fall under the 10 percent threshold because of holding companies’ preexisting 

reporting requirements.22 If we were to expand the blanket authorization to “any person,” 

we would need to establish appropriate reporting requirements so that we could monitor 

transfers to non-holding companies. This is important because, as we explained in the 

Supplemental Policy Statement, although there is a presumption that less than 10 percent 

of a utility’s shares will not result in a change of control, this presumption is rebuttable. 

In some instances, the transfer of less than 10 percent of voting shares may constitute a 

transfer of control.23 Accordingly, at this time we decline to expand the proposed generic 

blanket authorization as requested EEI and the Financial Group. However, we recognize 

that it could reduce regulatory burdens and encourage investment to allow transfers of 

securities not only to holding companies but to other “persons” and that such transfers 

will not harm competition or customers as long as there is sufficient ability to monitor 

possible changes in control of public utilities. Therefore, the Commission is willing to 

consider such blanket authorizations on a case-by-case basis if applicants can propose 

 21 See Blanket Authorization NOPR, FERC Stats. & Regs. ¶ 32,619 at P 9-11. 

22 See, e.g., 18 CFR 366.4; 18 CFR 366.23; 18 CFR parts 367-68. 

23 See Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253 at n.48. 
Docket No. RM07-21-000 - 17 - 

sufficient reporting requirements to allow adequate monitoring of possible changes in 

control and assure us that captive customers are adequately protected. 

21. We will also deny the Financial Group’s suggestion to eliminate the term 

“affiliate” from the proposed blanket authorization. However, we clarify that the term 

affiliate for purposes of the blanket authorization does not refer to the PUHCA 2005 

definition of affiliate, but rather, to the definition we adopt in the Affiliate Transactions 

Final Rule issued concurrently with this Final Rule. As discussed in the Affiliate 

Transactions Final Rule, we find it appropriate to explicitly incorporate the PUHCA 1935 

definition of affiliate for EWGs.24 We also adopt the PUHCA 1935 definition of affiliate 

for non-EWGs, but with adjustments to reflect our previously-used 10 percent voting 

interest threshold for non-EWGs and to eliminate certain language not applicable or 

necessary in the context of the FPA.25 Accordingly, this definition applies for purposes 

of the blanket authorizations adopted under section 203. 

22. Finally, with regard to the Oklahoma Commission’s request for language that 

would allow state commissions to continue to receive notices of investigations of 

regulated public utilities, we note that it previously has not been the practice of the Office 

of Enforcement to inform state commissions of investigations that it is conducting. 

 24 16 U.S.C. 824m. 

25 See, e.g., Morgan Stanley Capital Group, Inc., 72 FERC ¶ 61,082, at 61,436-37 

(1995). 
Docket No. RM07-21-000 - 18 - 

Section 1b.9 of our regulations requires that all investigative proceedings shall be treated 

as non-public by the Commission and its staff except to the extent that the Commission 

authorizes public disclosure, the matter is made a matter of public record during an 

adjudicatory proceeding, or disclosure is required under the Freedom of Information 

Act.26 The Commission concludes that the disclosure of such information could impede 

the willingness of market participants to self-report and otherwise cooperate in 

investigations. As such, we decline to grant the Oklahoma Commission’s request.27

2. Reconciling the Proposed Blanket Authorization with the Presumption 

Provided in the Supplemental Policy Statement

a. Comments

23. Both the Financial Group and EEI question whether the blanket authorization is 

necessary in light of the Supplemental Policy Statement that creates a presumption of no 

transfer of control for security transfers of under 10 percent of a company’s securities. 

They state that absent such a change in control, the Commission has indicated that a sale 

of securities is not a transaction subject to section 203(a)(1) jurisdiction. If that is the 

 26 18 CFR 1b.9. 

27 Our determination on this issue is also stated in the concurrently-issued Notice 

of Proposed Rulemaking in Docket Nos. AD07-7-000 and RM07-19-000 (Wholesale 

Competition in Regions with Organized Electric Markets) with regard to releasing 

information to state commissions on referrals by market monitoring units to the 

Commission for investigation. 
Docket No. RM07-21-000 - 19 - 

case, EEI questions why there should be a blanket authorization covering security 

transfers of up to 10 percent from utility companies to holding companies. 

24. EEI also states that it assumes that the proposed blanket authorization is meant to 

supplement and not modify other blanket authorizations and clarifications so, for 

example, the new authorization would apply as to securities transfers only in excess of 

$10 million. 

25. Mirant contends that, absent the Blanket Authorization NOPR, no pre-approval 

would be required from the Commission for a public utility to transfer up to 10 percent of 

voting securities, though it recognizes the “possibility” that there is a presumption that 

control could be exercised over the management or policies of the public utility. 

Accordingly, it states that the Commission should adopt the proposed blanket 

authorization to remove the presumption that exists in the Supplemental Policy Statement 

with respect to transfers of voting securities from a public utility to a public utility 

holding company. It further contends that the proposed blanket authorization will 

remove the inconsistency in the filing requirements between holding companies and 

public utilities. 

b. Commission Determination

26. The Commission provided guidance in the Supplemental Policy Statement that a 

transfer of less than 10 percent would be rebuttably presumed not to be a transfer of 

control in order to assist applicants in determining the need for prior authorization under 
Docket No. RM07-21-000 - 20 - 

section 203, not to define the scope or limit of our jurisdiction. We agree with 

commenters that if there is no change in control of a public utility as a result of the 

transfer of a public utility’s securities, then the public utility has not “otherwise disposed” 

of its jurisdictional facilities under section 203(a)(1)(A) and no Commission 

authorization is required. However, as the Commission stressed in the Supplemental 

Policy Statement, we cannot make an ex ante determination regarding what is control for 

purposes of the Commission’s section 203 analysis absent facts of a specific case. The 

circumstances that convey control vary depending on a variety of factors, including the 

transaction structure, the nature of voting rights and/or contractual rights and obligations 

conveyed in the transaction. Because of the possibility that transfers of up to 10 percent 

could result in a change in control, the rebuttable presumption in the Supplemental Policy 

Statement and the blanket authorization should help eliminate uncertainties. Moreover, 

we view the “in aggregate” limitation in the blanket authorization as important to ensure 

that companies do not circumvent section 203(a)(1)(A) through multiple dispositions of 

less than 10 percent. 

27. In response to EEI, we clarify that the new blanket authorization in this Final Rule 

is meant to supplement and not modify other blanket authorizations and clarifications in 

the Order No. 669 series. We also clarify that, consistent with the statute, it applies only 

to section 203(a)(1)(A) transfers of securities of a value in excess of $10 million. 
Docket No. RM07-21-000 - 21 - 

3. Reporting Requirement

28. In the Blanket Authorization NOPR, the Commission sought comment on 

whether, in association with the proposed blanket authorization, additional reporting by 

the public utility should be required. 

a. Comments

29. Most commenters, including EEI, the Financial Group, Mirant, and the Oklahoma 

Commission argue that the Commission should not impose a reporting requirement 

associated with the proposed blanket authorization. These commenters contend that no 

additional reporting obligation is required because the relevant information will be 

submitted by the holding company that is acquiring the securities. 

30. EEI argues that if the Commission expands the proposed blanket authorization to 

cover jurisdictional transfer of securities by public utilities to other entities, the 

Commission may wish to impose a counterpart to the 18 CFR 33.1(c)(4) holding 

company reporting requirement on the public utility, but should do so only for those 

transactions not already covered by § 33.1(c)(4). 

31. The Oklahoma Commission also argues that additional reporting is not needed. 

However, the Oklahoma Commission proposes that the relevant state commission be 

notified of additional reviews or requests about individual public utilities’ current 

acquisition information. The Oklahoma Commission also urges the Commission to add 

language that states that section 203 does not preempt applicable state law concerning 
Docket No. RM07-21-000 - 22 - 

reporting requirements, which would further protect the interest and authority of state 

commissions. 

32. In contrast, APPA/NRECA argue that the Commission should require a public 

utility to report on all dispositions of its securities undertaken pursuant to the blanket 

authorization. APPA/NRECA argue that the reporting burden is minimal and that the 

Commission should not have to (and, in fact, may not be able to) piece together this 

information from existing reports. 

b. Commission Determination

33. We will not require additional reporting requirements at this time. In the Blanket 

Authorization NOPR, the Commission proposed not to impose additional reporting 

requirements because existing regulations require the submission of schedules and forms 

that are also provided to the SEC.28 While we agree with APPA/NRECA that additional 

reporting requirements might provide greater efficiency to the Commission, at this time 

we believe the potential reporting burden on public utilities outweighs the possible 

efficiency gains. 

 28 For example, the Commission already requires the holding company to provide 

to the Commission copies of any Schedule 13D, Schedule 13G and Form 13F, at the 

same time and on the same basis, as filed with the SEC in connection with securities 

purchased, acquired or taken pursuant to the blanket authorization under 

section 203(a)(2) provided in § 33.1(c)(2) of the Commission’s regulations. 

18 CFR 33.1(c)(4). 
Docket No. RM07-21-000 - 23 - 

34. We clarify, as requested by the Oklahoma Commission, that section 203 does not 

preempt applicable state law concerning reporting requirements. With regard to the 

Oklahoma Commission’s request that state commissions be notified of additional reviews 

or requests about individual public utilities’ current acquisition information, to the extent 

that such reviews or requests relate to an investigation, they are subject to the 

Commission’s rules governing investigations as described supra. However, if the 

reviews or requests are made as the result of a public inquiry, such notification may be 

made. For example, the Commission’s Division of Audits in the Office of Enforcement 

has provided notice of public final audit reports of jurisdictional companies to affected 

states. We continue to encourage our audits staff to continue this practice. 

B. Expansion of the Proposed Blanket Authorization

1. Blanket Authorization to “Parallel” Those Granted Under Section 

203(a)(2)

a. Comments

35. The Blanket Authorization NOPR also requested comments on whether the 

proposed blanket authorization under section 203(a)(1) should be extended to the transfer 

of securities by a public utility to a holding company granted a blanket authorization: 

(1) § 33.1(c)(8) for a person that is a holding company solely with respect to owning one 

or more EWGs, FUCOs, or QFs to acquire the securities of additional EWGs, FUCOs, or 

QFs; (2) § 33.1(c)(9) for a bank holding company or subsidiary that is regulated by the 

Federal Reserve Board or Comptroller of the Currency to acquire and hold an unlimited 
Docket No. RM07-21-000 - 24 - 

amount of the securities of holding companies that include a transmitting utility or an 

electric utility company if such acquisitions and holdings are in the normal course of 

business and the securities are held for certain identified purposes29; and (3) § 33.1(c)(10) 

for a holding company or subsidiary to acquire public utility or holding company 

securities for underwriting or hedging purposes under certain conditions.30

 29 The securities must be held: (i) as a fiduciary; (ii) as principal for derivatives 

hedging purposes incidental to the business of banking and it commits not to vote such 

securities to the extent they exceed 10 percent of the outstanding shares; (iii) as collateral 

for a loan; or (iv) solely for purposes of liquidation and in connection with a loan 

previously contracted for and owned beneficially for a period of not more than two years, 

with the following conditions and reporting requirement: The holding does not confer a 

right to control, positively or negatively, through debt covenants or any other means, the 

operation or management of the public utility or public utility holding company, except 

as to customary creditors’ rights or as provided under the United States Bankruptcy 

Code; and the parent holding company files with the Commission on a public basis and 

within 45 days of the close of each calendar quarter, both its total holdings and its 

holdings as principal, each by class, unless the holdings within a class are less than one 

percent of outstanding shares, irrespective of the capacity in which they were held. 

18 CFR 33.1(c)(9). 

30 For purposes of conducting underwriting activities, the blanket authorization is 

subject to the condition that holdings that the holding company or its subsidiary are 

unable to sell or otherwise dispose of within 45 days are to be treated as holdings as 

principal and thus subject to a limitation of 10 percent of the stock of any class unless the 

holding company or its subsidiary has within that period filed an application under FPA 

section 203 to retain the securities and has undertaken not to vote the securities during the 

pendency of such application; and the parent holding company files with the Commission 

on a public basis and within 45 days of the close of each calendar quarter, both its total 

holdings and its holdings as principal, each by class, unless the holdings within a class 

are less than one percent of outstanding shares, irrespective of the capacity in which they 

were held. For purposes of engaging in hedging transactions, the blanket authorization is 

subject to the condition that if such holdings are 10 percent or more of the voting 

securities of a given class, the holding company or its subsidiary shall not vote such 

 (continued) 
Docket No. RM07-21-000 - 25 - 

36. EEI, the Financial Group and Mirant support extension of the blanket 

authorizations. They generally argue that if holding company acquisitions authorized by 

§§ 33.1(c)(8), (c)(9) and (c)(10) pose no concern warranting Commission review, 

counterpart public utility transfers subject to the same constraints should also pose no 

concern. They also argue that there is no benefit to the acquiring entity under a blanket 

authorization under section 203(a)(2) unless there is a reciprocal blanket authorization 

under section 203(a)(1). 

37. In addition, the Financial Group recommends that the § 33.1(c)(8) blanket 

authorization be extended to companies that will become holding companies only after 

the transaction has been consummated (e.g., special purpose vehicles that are created to 

acquire and hold the jurisdictional assets of another company) in order for those 

companies to take advantage of the blanket. The Financial Group also argues that the 

proposed blanket authorization under section 203(a)(1) should be extended so that a 

public utility can transfer an unlimited amount of its securities to any entity that will 

acquire and hold such securities for the four purposes enumerated in § 33.1(c)(9). It 

asserts that the Commission has previously found in the section 203(a)(2) context that 

these types of transactions cannot harm competition or captive customers because the 

securities are being transferred for reasons other than to exercise control over the public 

 

holdings to the extent that they are 10 percent or more. 18 CFR 33.1(c)(10). 
Docket No. RM07-21-000 - 26 - 

utility. Thus, it argues, these transactions do not constitute a change in control over a 

public utility, which is the core focus of section 203(a)(1). Similarly, with regard to 

§ 33.1(c)(10), the Financial Group argues that the proposed blanket authorization under 

section 203(a)(1) should be extended to a public utility transferring its securities to any 

entity. 

38. APPA/NRECA argue against granting a parallel blanket authorization under 

section 203(a)(1) for a public utility to transfer securities of EWGs, FUCOs or QFs (to 

parallel § 33.1(c)(8)) or to transfer securities to a non-bank holding company or its 

subsidiary for purposes of engaging in hedging transactions (to parallel § 33.1(c)(10)). 

They argue that preauthorizing an EWG or QF that is a public utility to transfer all or any 

part of its securities to a holding company would enable a public utility to transfer control 

of its generation facilities to a holding company that already controls another public 

utility without Commission scrutiny of the transaction for competitive harm. 

39. Regarding the proposal for a section 203(a)(1) blanket authorization to parallel 

§ 33.1(c)(10), APPA/NRECA state that there is no basis for finding that transactions 

covered by this blanket are consistent with the public interest even with the 10 percent 

voting limitation imposed on the holding company.31 Further, they state that “hedging 

 31 Under § 33.1(c)(10)(ii), a holding company or its subsidiaries that acquire 

10 percent or more of the voting securities of a public utility or a holding company 

for hedging transactions are limited to voting less than 10 percent of those securities. 
Docket No. RM07-21-000 - 27 - 

transactions” are not defined in the regulations or in the NOPR, and there is no 

requirement that the acquiring company be in some business other than the utility, power 

or energy business, and thus no assurance that the hedging transaction is only incidental 

to the holding company’s main business.32 They recommend that, however, if the 

Commission were to grant a further blanket authorization under section 203(a)(1), it 

should contain a 10 percent “in aggregate” limitation. 

b. Commission Determination

40. We will adopt the proposal to extend a blanket authorization under 

section 203(a)(1) to a public utility in circumstances where a holding company qualifies 

for, and the exercise of the blanket authorization is for the purpose of facilitating the 

transactions authorized under the §§ 33.1(c)(8), 33.1(c)(9) or a 33.1(c)(10) blanket 

authorizations under section 203(a)(2). 

41. As to the blanket authorization to parallel § 33.1(c)(8), we will require that the 

transfer of securities by a public utility to a holding company under that blanket be 

subject to the 10 percent “in aggregate” limitation as in the proposed limited blanket 

authorization described above. We recognize that the blanket authorization we adopt 

in this Final Rule to facilitate transactions undertaken by holding companies under 

 32 APPA/NRECA note that these problems already exist in the context 

of the blanket authorization under section 203(a)(2) provided in 

18 CFR 3.1(c)(10)(ii). 
Docket No. RM07-21-000 - 28 - 

§ 33.1(c)(8) does not precisely parallel the section 203(a)(2) authorization since the 

section 203(a)(2) authorization does not include the “in aggregate” limitation. However, 

we believe this limitation will provide better protection against possible transfer of 

control of a public utility and the acquisition of generation market power by the acquiring 

holding company without Commission approval. 

42. The Financial Group’s request to extend the proposed section 203(a)(1) blanket to 

public utilities transferring securities to entities that will become holding companies only 

after the transaction has been consummated is moot because, as discussed above, the 

“parallel” 33.1(c)(8) blanket is restricted to cases where, after the transfer, the holding 

company and any of its associate or affiliate companies in aggregate will own less than 

10 percent of the outstanding voting interests of such public utility. Therefore, the 

scenario presented by the Financial Group would not occur because an entity that was not 

previously a holding company could not become a holding company as a result of a 

transaction whereby the acquiring entity is limited to owning less than 10 percent of the 

shares of the public utility.33

 33 Transfers of securities that result in the acquiring company holding less than 

10 percent of the outstanding voting shares of a public utility would have the presumption 

of not being a change in control and, therefore, not requiring section 203(a)(1) 

authorization. See Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253 at 

P 57. 
Docket No. RM07-21-000 - 29 - 

43. As to the request for a blanket authorization under section 203(a)(1) to parallel 

that granted under section 203(a)(2) in § 33.1(c)(9), we note that that authorization under 

section 203(a)(2) applies only to acquisitions by bank holding companies or subsidiaries 

that are regulated by the Federal Reserve Board or Comptroller of the Currency (banks) 

of the securities of holding companies that include transmitting utilities and electric 

utility companies if such acquisitions and holdings are in the normal course of the 

acquiring bank’s business and are held for certain purposes. In some cases the entity 

whose securities are acquired by the bank would have an obligation under section 

203(a)(1) to seek Commission review before disposing of its securities. Typically, these 

cases would occur when the disposing holding company is a public utility and is also the 

issuer of the securities being acquired by the bank for those limited circumstances set 

forth in § 33.1(c)(9). As stated in Order No. 669-A, entities that are subject to the 

regulatory oversight of the Federal Reserve Bank or the Comptroller of the Currency “are 

likely to be significantly constrained in their use of those securities so as to not affect 

regulation, rates or competition under the FPA.”34 Further, the Commission conditioned 

the authorization such that the holding of the securities does not confer a right to control 

the utility operation or management and required a quarterly reporting on the securities so 

held by the bank. Accordingly, we will adopt the proposal to extend the section 

 34 Order No. 669-A, FERC Stats. & Regs. ¶ 31,214 at P 124. 
Docket No. RM07-21-000 - 30 - 

203(a)(1) blanket to a disposing holding company that is also a public utility. Because 

the entities eligible for the § 33.1(c)(9) blanket authorization are already subject to 

numerous conditions and reporting requirements, we do not believe additional conditions 

are required. 

44. With respect to the Financial Group’s request that the section 203(a)(1) blanket 

authorization be extended so that a public utility can transfer an unlimited amount of its 

securities to any entity that will acquire and hold such securities for the four enumerated 

purposes in § 33.1(c)(9), we cannot be assured that protections such as those that are in 

place for entities that are subject to the regulatory oversight of the Federal Reserve Bank 

or the Comptroller of the Currency would apply to entities that are not subject to such 

regulatory oversight. Therefore, we will continue to evaluate requests for blanket 

authorizations for entities that are not subject to regulatory oversight by the Federal 

Reserve Bank or the Comptroller of the Currency to acquire public utility securities, and 

for a public utility to transfer securities to such entities, on a case-by-case basis when 

such authorizations are needed.35

45. As to the request for a blanket authorization under section 203(a)(1) to facilitate 

the transactions authorized under § 33.1(c)(10), we grant an unlimited authorization for 

 35 See Morgan Stanley, 121 FERC ¶ 61,060 (2007), clarified by, 122 FERC 

¶ 61,094 (2008); The Goldman Sachs Group, Inc., 121 FERC ¶ 61,059 (2007), clarified 

by, 122 FERC ¶ 61,005 (2008). 
Docket No. RM07-21-000 - 31 - 

facilitating such transactions under section 203(a)(1). In granting the blanket 

authorization for the transactions for hedging purposes under section 203(a)(2), the 

Commission limited the voting ability of the entity acquiring the securities. If the amount 

held is 10 percent or more of the relevant class, the acquiring entity is limited to voting 

less than 10 percent of those securities. This existing condition on the party acquiring the 

securities for hedging purposes should be adequate to ensure that any disposing entity 

facilitating such transactions and requiring authorization under section 203(a)(1) does not 

affect a disposition or change in control of the issuer of the public utility securities.36

2. Blanket Authorization as to Certain Jurisdictional Contracts

46. In the Blanket Authorization NOPR, the Commission sought comment as to 

whether the Commission should grant a blanket authorization under section 203(a)(1) for 

the acquisition or disposition of a jurisdictional contract where neither the acquirer nor 

transferor has captive customers and the contract does not convey control over the 

operation of a generation or transmission facility. 

a. Comments

47. The Commission received comments from: APPA/NRECA and Modesto 

(referred to herein as Customers); EEI, EPSA and Mirant (referred to herein as Sellers); 

and the Financial Group. Customers oppose the blanket authorization, Sellers support it, 

 36 Order No. 669-A, FERC Stats. & Regs. ¶ 31,214 at P 132. 
Docket No. RM07-21-000 - 32 - 

and the Financial Group not only supports it, but proposes expanding the blanket 

authorization. 

48. Customers argue that the proposal would not protect transmission customers 

against cross-subsidization in the same way that captive wholesale and retail power 

customers are protected. They therefore propose narrowing the blanket authorization to 

cases where “neither the acquirer nor the transferor has captive customers or owns or 

provides transmission service over Commission-jurisdictional facilities.”37 They also 

argue that, even if revised to include the situation where neither the acquirer nor the 

transferor has captive customers or owns or provides transmission service over 

jurisdictional transmission facilities, allowing an entity such as a power marketer or 

independent power producer to transfer its book of jurisdictional power sales contracts at 

any time and without the purchaser’s consent (which may or may not be expressly in the 

contract) would leave the purchaser with no recourse other than a section 206 complaint 

and the burden of proof and costs associated therewith. They maintain that purchasers 

under the jurisdictional contract, even if not “captive” may be a load-serving entity 

dependent on the contract for a reliable power supply or to meet regulatory or contractual 

obligations. They also maintain that a purchaser would have no say in the type of entity 

to whom a seller would transfer contracts, creating the possibility that the entity may not 

 37 APPA/NRECA Comments at 13-14. 
Docket No. RM07-21-000 - 33 - 

be a suitable counterparty based upon factors such as creditworthiness or other financial 

criteria, or inexperience in administering the functions contemplated in the subject 

contract. Some Customers suggest that transfers may result in problems similar to the 

mortgage-loan business. 

49. Sellers support the blanket authorization provided that it focuses only on 

transactions within the Commission’s jurisdiction under section 203, and would 

supplement and not override or otherwise limit the proposed blanket authorization to 

parallel § 33.1(c)(2)(ii) or existing blanket authorizations. Sellers argue that with the 

stated constraints, the acquisition or disposition should pose no competitive or rate 

concerns or impacts on customers that would warrant case-by-case approval because: 

(1) the transfer of a wholesale power contract which does not provide for the control of 

generation or transmission cannot affect horizontal or vertical market power; (2) the 

transfer of a wholesale power contract to a party that does not have captive customers 

cannot affect the rates of captive customers (and therefore has no rate or crosssubsidization impacts); and (3) the transfer of a wholesale power contract does not affect 

the Commission’s ability to regulate the contract or the parties to the transaction. Sellers 

assert that there is no regulatory purpose served by requiring section 203 approval for 

these transactions and states that it is unaware of a single instance where significant 

issues have been raised with respect to requests for approval of wholesale power 
Docket No. RM07-21-000 - 34 - 

contracts of this type. Further, Sellers argue that requiring pre-authorization in this 

circumstance results in delays and costs. 

50. The Financial Group also supports the additional blanket authorization. In 

addition, it suggests that the blanket authorization not be limited to cases where the 

transferor also does not have captive customers. The Financial Group argues that where 

a transferor has captive customers, the issue is whether the transferor would be 

transferring the contract at a below-market price, thereby depriving its captive customers 

of the full value of the contract. However, where the transacting parties are not affiliates, 

it should be assumed that the transferor would seek market price, regardless of whether or 

not it has captive customers. Accordingly, it proposes the following addition to 

§ 33.1(c): “Any public utility is granted a blanket authorization under section 203(a)(1) 

of the Federal Power Act to dispose of, transfer, or acquire a contract for the sale of 

electric energy in interstate commerce where the contract does not convey control over 

the operation of a generation or transmission facility, the transferor and acquirer are not 

affiliated, and the acquirer does not have captive customers.”38

b. Commission Determination

51. We adopt the proposed blanket authorization with modifications to address 

commenters’ concerns. We agree with Sellers that the transfer of a wholesale power 

 38 Financial Group Comments at 18. 
Docket No. RM07-21-000 - 35 - 

contract which does not provide for the control of generation or transmission cannot 

affect horizontal or vertical market power. We also agree that, with the modification 

proposed by APPA/NRECA, the transfer of a wholesale power contract from one party 

that does not have captive customers or owns or provides transmission service over 

jurisdictional transmission facilities to another party that also does not have captive 

customers or owns or provides transmission service over jurisdictional transmission 

facilities cannot affect the rates of captive customers or transmission customers (and 

therefore has no rate or cross-subsidization impacts). However, in at least one case 

involving a transfer from one affiliated company to another, significant issues were raised 

with respect to requests for section 203 approval of wholesale power contracts of this 

type.39 Such transactions do not have the market discipline that is present in arm’s-length 

negotiations between unaffiliated parties. Finally, Sellers’ argument that the transfer of a 

wholesale power contract would not affect the Commission’s ability to regulate the 

contract or the parties to the transaction ignores the possibility of the contract being 

transferred to a non-jurisdictional entity, in which case the Commission could lose the 

ability to regulate the contract or parties to the contract. Therefore, we will adopt the 

blanket authorization proposed in the Blanket Authorization NOPR, narrowing the 

 39 Mirant Corp., 111 FERC ¶ 61,425 (2005). Pursuant to its bankruptcy 

reorganization, Mirant transferred power agreements with PEPCO to a newly-formed 

entity within the corporate family. 
Docket No. RM07-21-000 - 36 - 

blanket to apply in cases where neither the acquirer nor the transferor has captive 

customers or owns or provides transmission service over jurisdictional transmission 

facilities, and adding the following language to the end of the proposed blanket 

authorization: the parties to the transaction are neither associate nor affiliate companies, 

and the acquirer is a public utility. 

52. Customers argue that granting a blanket authorization for the transfer of such 

jurisdictional contracts without the purchaser’s consent (which may or may not be 

expressly in the contract) would result in the purchaser having no say in the type of entity 

to whom a seller would transfer contracts, thus leaving the purchaser with no recourse 

other than a section 206 complaint and the burden of proof and costs associated 

therewith. We do not find that argument compelling because a section 203 proceeding is 

unlikely to be the forum for a purchaser to protect its interest under a contractual 

arrangement. The Commission has stated that contractual provisions are beyond the 

scope of a section 203 proceeding.40 Based on our experience, as discussed above, the 

transfer of such contracts, with the additional conditions on the purchaser and acquirer of 

the contracts also discussed above, would not adversely affect competition, rates or 

regulation, and would not result in cross-subsidization, and therefore would be consistent 

with the public interest. Moreover, whether the contracts were being transferred pursuant 

 40 See, e.g., American Electric Power Service Corporation, 107 FERC ¶ 61,209, at 

P 17 (2004). 
Docket No. RM07-21-000 - 37 - 

to a blanket authorization or an individual section 203 authorization, purchasers would be 

able to protect their interests by exercising any relevant contractual provisions and, if 

necessary, by filing a section 206 complaint. Thus, granting the blanket authorization 

does not adversely affect a purchaser’s ability to protect its interests. 

53. We decline to adopt the Financial Group’s proposal to expand the blanket 

authorization to cover cases where the transferor does have captive customers but the 

acquirer does not. We agree with the Financial Group that, presumably, the transferor 

would seek market price regardless of whether or not it has captive customers. However, 

captive customers of the transferor would not necessarily receive the benefit from such 

transactions and could be faced with paying higher rates due to increased costs for 

replacement power. 

C. New Requests for Clarification and/or Blanket Authorizations

1. Blanket Authorization Under Section 203(a)(1) for Public Utility Sales 

of Non-Voting Securities

a. Comments

54. EEI argues that the Commission should disclaim jurisdiction under section 

203(a)(1) over public utility sales of non-voting securities. EEI argues that such an 

authorization would parallel the authorization in 18 CFR 33.1(c)(2)(i) for holding 

companies to acquire non-voting securities, if the acquisition does not transfer control. 
Docket No. RM07-21-000 - 38 - 

b. Commission Determination

55. We agree that if a non-voting security does not convey control, its transfer is not 

jurisdictional under the “or otherwise dispose” provision in section 203(a)(1)(A).41 As 

the Commission stated in the Supplemental Policy Statement, and has recently held in 

case-specific requests for blanket authorizations under section 203(a)(1),42 transactions 

that do not transfer control of a public utility or jurisdictional facilities do not fall within 

the “otherwise dispose” language of section 203(a)(1)(A) and thus do not require 

approval under section 203(a)(1)(A).43 If a non-voting security conveys control (e.g., 

through veto rights or some other means), our requirements regarding transfers of control 

apply. 

2. Clarification Regarding a Public Utility’s Transfer of Securities to its 

Holding Companies

a. Comments

56. EEI argues that the Commission should clarify that a public utility that is a 

subsidiary of a holding company may transfer its own securities to that holding company 

 41 We note that the situation is different under section 203(a)(2). Jurisdiction over 

acquisitions of securities under section 203(a)(2) attaches whether or not there is a 

transfer of control if the acquisition is over $10 million. 

42 Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253 at P 37; see, e.g., 

Legg Mason, Inc., 121 FERC ¶ 61,061, at P 18 (2007). 

43 This does not affect a public utility’s responsibilities under 

sections 203(a)(1)(C) or 203(a)(1)(D), which apply to public utilities’ acquisitions 

of public utility securities and generating facilities. 
Docket No. RM07-21-000 - 39 - 

without a separate authorization as a counterpart to the 18 CFR 33.1(c)(2)(iii) 

authorization for holding companies to acquire such securities. EEI argues that because 

the holding company acquisition of such securities (which is inherently part of what it 

means to be a holding company) can result in no change of control, the Commission lacks 

jurisdiction. 

b. Commission Determination

57. We find that a public utility that is the subsidiary of a single holding company may 

transfer its own securities to that holding company without a separate authorization under 

section 203(a)(2) for holding companies to acquire such securities. Where a single 

holding company system already has control of a subsidiary public utility, the transfer of 

securities from that public utility to the holding company would not be a change in 

control.44

3. Clarification Regarding the Internal Corporate Reorganization 

Blanket Authorization

a. Comments

58. EEI asks the Commission to discuss and/or revise the internal corporate 

reorganization blanket authorization under 18 CFR 33.1(c)(6)45 to clarify that non-

 44 Our determination here does not affect any separate requirement that the public 

utility may have under section 204 of the FPA regarding the issuance of securities. 

16 U.S.C. 824c. 

45 This is a blanket authorization under both sections 203(a)(1) and 

section 203(a)(2) for internal corporation reorganizations that do not result in the 

 (continued) 
Docket No. RM07-21-000 - 40 - 

traditional public utilities with market-based rates should not be considered traditional 

public utilities merely by ownership of incidental transmission facilities.46

59. EEI states that while the Commission has clarified that the blanket authorization in 

18 C.F.R. § 33.1(c)(6) allows “upstream” reorganizations of “non-traditional public 

utilities,” the blanket authorization does not allow the reorganization of a traditional 

public utility. EEI states that to qualify as a non-traditional public utility under the 

language of § 33.1(c)(6), the entity may not “own or provide transmission service over 

jurisdictional transmission facilities.” 

60. According to EEI, because many non-traditional utilities, including EWGs and 

others with market-based rates, own some incidental jurisdictional transmission facilities 

(e.g., step-up transformers), the blanket authorization rule for internal corporate 

reorganizations may unnecessarily restrict the reorganization of what otherwise would 

clearly be a non-traditional public utility. EEI argues that ownership of step-up 

transformers or other incidental transmission facilities should not change the fact that 

case-by-case approval by the Commission is unnecessary for the reorganization of such 

 

reorganization of a traditional public utility that has captive customers or that owns or 

provides transmission service over jurisdictional transmission facilities, and that do not 

present cross-subsidization issues. 18 CFR 33.1(c)(6). 

46 EEI notes that it is not proposing to expand the blanket authorization for internal 

corporate reorganizations to cover the transfer of assets from one non-traditional public 

utility subsidiary to another, as such proposal was rejected in the Supplemental Policy 

Statement. 
Docket No. RM07-21-000 - 41 - 

otherwise non-traditional utilities with no captive customers and whose reorganization 

would pose no cross-subsidization issues and would not change the ultimate control of 

the entities. 

b. Commission Determination

61. We grant EEI’s request for clarification. The term “traditional public utility,” as 

used in the Order No. 669 rulemaking proceeding was taken from prior Commission 

orders where the term was used to refer to utilities with franchised service territories.47 In 

the Notice of Proposed Rulemaking prior to issuance of Order No. 669, the Commission 

further noted that, “[i]n the context of considering cross-subsidization or affiliate abuse 

concerns associated with power transactions between public utility affiliates, the 

Commission has differentiated between utility activities and non-utility activities 

according to whether they were being conducted by a public utility with captive 

wholesale or retail customers served under cost-based rates (sometimes described as a 

‘traditional public utility’).”48 In Order No. 669, the Commission continued to implicitly 

define traditional utility as a public utility with wholesale or retail customers served 

 47 See, e.g., Sierra Pacific Power Co., 95 FERC ¶ 61,193, at 61,178-79 (2001). 

48 Transactions Subject to FPA Section 203, Notice of Proposed Rulemaking, 

FERC Stats. & Regs. ¶ 32,589, at P 43 (2005). In Order No. 669, the Commission 

continued to define “traditional public utility” as those with wholesale or retail customers 

served under cost-based regulation. Order No. 669, FERC Stats. & Regs. ¶ 31,200 at 

P 169. 
Docket No. RM07-21-000 - 42 - 

under cost-based regulation.49 Thus, EWGs and other utilities that do not have franchised 

service territories are not considered to be “traditional public utilities” in the first 

instance, and therefore, their ownership of merely incidental transmission facilities does 

not make such a utility a traditional public utility by virtue of its ownership of those 

facilities. 

D. Clarification of the Definition of “Captive Customer”

62. In considering the comments in this docket, in response to the Affiliate 

Transactions NOPR and on rehearing of the Market-Based Rate Final Rule, and in 

reviewing the use of the definition of captive customers in our other rules, we believe it 

appropriate to modify the definition of captive customers to make explicit what was only 

implicit in our earlier rules – that the definition is intended to apply to customers served 

by a franchised public utility under cost-based regulation. Accordingly, the Commission 

will revise the definition of captive customers in 18 CFR 33.1(b)(5) to mean any 

wholesale or retail electric energy customers served by a franchised public utility under 

cost-based regulation. 

V. Information Collection Statement 

63. The Office of Management and Budget’s (OMB) regulations require that OMB 

approve certain information collection and data retention requirements imposed by 

 49 Order No. 669, FERC Stats. & Regs. ¶ 31,200 at P 169. 
Docket No. RM07-21-000 - 43 - 

agency rules.50 The information collection requirements in this Final Rule are identified 

under the Commission’s data collection, FERC-519, “Applications Under Federal Power 

Act Section 203.” Under section 3507(d) of the Paperwork Reduction Act of 1995,51 the 

reporting requirements in this rulemaking will be submitted to OMB for review. 

64. The “public protection” provisions of the Paperwork Reduction of 1995 require 

each agency to display a currently valid control number and inform respondents that a 

response is not required unless the information collection displays a valid OMB control 

number on each information collection or provides a justification as to why the 

information collection control number cannot be displayed. In the case of information 

collections published in regulations, the control number is to be published in the Federal 

Register. 

Public Reporting Burden: As the Commission stated in the Blanket Authorization 

NOPR, the regulations should have a minimal impact on the current reporting burden 

associated with an individual application, as they do not substantially change the filing 

requirements with which section 203 applicants must currently comply. Further, the 

Commission does not expect the total number of section 203 applications under amended 

section 203 to increase, but rather expects the total number of section 203 applications to 

 50 5 CFR 1320. 

51 44 U.S.C. 3507(d). 
Docket No. RM07-21-000 - 44 - 

decrease. This is because the regulations provide categories of jurisdictional transactions 

for which the Commission would not require applications seeking before-the-fact 

approval. This would reduce the burden on the electric industry because it will reduce 

the number of applications that need to be made to the Commission. The Commission 

received eight comments on the Blanket Authorization NOPR and no entity specifically 

addressed the Commission’s information collection statement. 

The Commission is submitting a copy of this Final Rule to OMB for review and 

approval. In their notice of November 28, 2007, OMB took no action on the Blanket 

Authorization NOPR, instead deferring their approval until review of the Final Rule. 

Title: FERC-519, “Application Under the Federal Power Act, Section 203” 

Action: Revised Collection 

OMB Control No: 1902-0082 

 The applicant will not be penalized for failure to respond to this information 

collection unless the information collection displays a valid OMB control number or the 

Commission has provided justification as to why the control number should not be 

displayed. 

Respondents: Businesses or other for profit. 

Frequency of Responses: N/A

Necessity of the Information: This Final Rule codifies limited blanket authorizations 

under FPA section 203(a)(1), providing for categories of jurisdictional transactions under 
Docket No. RM07-21-000 - 45 - 

section 203(a)(1) for which the Commission would not require applications seeking 

before-the-fact approval.

Internal Review: The Commission has conducted an internal review of the public 

reporting burden associated with the collection of information and assured itself, by 

means of internal review, that there is specific, objective support for its information 

burden estimate. 

65. Interested persons may obtain information on the reporting requirements by 

contacting: Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, 

D.C., 20426 [Attention: Michael Miller, Office of the Executive Director, Phone 

(202) 502-8415, fax (202) 273-0873, e-mail: michael.miller@ferc.gov]. Comments on 

the requirements of the Final Rule may also be sent to the Office of Information and 

Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503 

[Attention: Desk Officer for the Federal Energy Regulatory Commission, fax 

(202) 395-7285, e-mail oira_submission@omb.eop.gov]. 

VI. Environmental Analysis

66. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

on the human environment.52 The Commission has categorically excluded certain actions 

 52 Order No. 486, Regulations Implementing the National Environmental Policy 

Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs., Regulations Preambles 1986-

 (continued) 
Docket No. RM07-21-000 - 46 - 

from this requirement as not having a significant effect on the human environment.53 The 

Final Rule is categorically excluded as it “do[es] not substantially change the effect of 

legislation or regulations being amended” and addresses actions under section 203.54 

Accordingly, no environmental assessment is necessary and none has been prepared in 

this Final Rule. 

VII. Regulatory Flexibility Act

67. The Regulatory Flexibility Act of 1980 (RFA)55 generally requires a description 

and analysis of Final Rules that will have significant economic impact on a substantial 

number of small entities.56 However, the RFA does not define “significant” or 

“substantial.” Instead, the RFA leaves it up to an agency to determine the effect of its 

regulations on small entities. 

 

1990 ¶ 30,783 (1987). 

53 18 CFR 380.4. 

54 See 18 CFR 380.4(a)(2)(ii), 380.4(a)(16). 

55 5 U.S.C. 601-12. 

56 The RFA definition of “small entity” refers to the definition provided in the 

Small Business Act, which defines a “small business concern” as a business that is 

independently owned and operated and that is not dominant in its field of operation. 

15 U.S.C. 632. The Small Business Size Standards component of the North American 

Industry Classification System defines a small electric utility as one that, including its 

affiliates, is primarily engaged in the generation, transmission, and/or distribution of 

electric energy for sale and whose total electric output for the preceding fiscal year did 

not exceed 4 million MWh. 13 CFR 121.201. 
Docket No. RM07-21-000 - 47 - 

68. Most filing companies regulated by the Commission do not fall within the RFA’s 

definition of small entity.57 Moreover, as noted above, this Final Rule codifies blanket 

authorizations under FPA section 203(a)(1), providing for categories of jurisdictional 

transactions under section 203(a)(1) for which the Commission would not require beforethe-fact approval. Thus, filing requirements are reduced by the rule. Therefore, the 

Commission certifies that the Final Rule will not have a significant economic impact on a 

substantial number of small entities. As a result, no regulatory flexibility analysis is 

required. 

VIII. Document Availability

69. In addition to publishing the full text of this document in the Federal Register, the 

Commission provides all interested persons an opportunity to view and/or print the 

contents of this document via the Internet through FERC's Home Page 

(http://www.ferc.gov) and in FERC’s Public Reference Room during normal business 

hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, N.E., Room 2A, 

Washington D.C. 20426. 

70. From FERC’s Home Page on the Internet, this information is available on 

eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft 

 57 5 U.S.C. 601(3), citing to section 3 of the Small Business Act, 15 U.S.C. 632. 

Section 3 of the Small Business Act defines a “small-business concern” as a business 

which is independently owned and operated and which is not dominant in its field of 

operation. 
Docket No. RM07-21-000 - 48 - 

Word format for viewing, printing, and/or downloading. To access this document in 

eLibrary, type the docket number excluding the last three digits of this document in the 

docket number field. 

71. User assistance is available for eLibrary and the FERC’s website during normal 

business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) 

or email at ferconlinesupport@ferc.gov, or the Public Reference Room at 

(202) 502-8371, TTY (202)502-8659. E-mail the Public Reference Room at 

public.referenceroom@ferc.gov. 

IX. Effective Date and Congressional Notification

72. These regulations are effective [insert date 30 days from publication in

FEDERAL REGISTER]. The Commission has determined, with the concurrence of the 

Administrator of the Office of Information and Regulatory Affairs of OMB, that this rule 

is not a “major rule” as defined in section 351 of the Small Business Regulatory 

Enforcement Fairness Act of 1996. 
Docket No. RM07-21-000 - 49 - 

List of subjects in 18 CFR part 33

Electric utilities, Reporting and recordkeeping requirements, Securities. 

By the Commission. 

( S E A L ) 

 Kimberly D. Bose, 

 Secretary. 

 
 In consideration of the foregoing, the Commission amends Part 33, Chapter I, 

Title 18, Code of Federal Regulations, to read as follows: 

PART 33 – APPLICATIONS UNDER FEDERAL POWER ACT SECTION 203. 

1. The authority citation for part 33 continues to read as follows: 

 Authority: 16 U.S.C. 791a-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 

7101-7352; Pub. L. No. 109-58, 119 Stat. 594. 

2. In § 33.1, paragraph (b)(5) is revised to read as follows: 

§ 33.1 Applicability, definitions, and blanket authorizations. 

* * * * * 

(b) * * * 

 (5) For purposes of this part, the term captive customers means any wholesale or 

retail electric energy customers served by a franchised public utility under cost-based 

regulation. 

3. In § 33.1, paragraphs (c)(12) through (c)(15) are added to read as follows: 

§ 33.1 Applicability, definitions, and blanket authorizations. 

* * * * * 

(c) * * * 

(12) A public utility is granted a blanket authorization under section 203(a)(1) of 

the Federal Power Act to transfer its outstanding voting securities to any holding 

company granted blanket authorizations in paragraph (c)(2)(ii) of this section if, after the 
Docket No. RM07-21-000 - 2 - 

transfer, the holding company and any of its associate or affiliate companies in aggregate 

will own less than 10 percent of the outstanding voting interests of such public utility. 

(13) A public utility is granted a blanket authorization under section 203(a)(1) of 

the Federal Power Act to transfer its outstanding voting securities to any holding 

company granted blanket authorization in paragraph (c)(8) of this section if, after the 

transfer, the holding company and any of its associate or affiliate companies in aggregate 

will own less than 10 percent of the outstanding voting interests of such public utility. 

(14) A public utility is granted a blanket authorization under section 203(a)(1) of 

the Federal Power Act to transfer its outstanding voting securities to any holding 

company granted blanket authorization in paragraph (c)(9) of this section. 

(15) A public utility is granted a blanket authorization under section 203(a)(1) of 

the Federal Power Act to transfer its outstanding voting securities to any holding 

company granted blanket authorization in paragraph (c)(10) of this section. 

(16) A public utility is granted a blanket authorization under section 203(a)(1) of 

the Federal Power Act for the acquisition or disposition of a jurisdictional contract where 

neither the acquirer nor transferor has captive customers or owns or provides 

transmission service over jurisdictional transmission facilities, the contract does not 

convey control over the operation of a generation or transmission facility, the parties to 

the transaction are neither associate nor affiliate companies, and the acquirer is a public 

utility.