130 FERC ¶ 61,046 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Parts 33 and 35 

Docket No. RM09-16-000 

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 

(January 21, 2010) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Proposed Rulemaking. 

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

to amend its regulations pursuant to sections 203 and 205 of the Federal Power Act 

(FPA) to grant blanket authorization to acquire securities under section 203 and amend 

the definitions of “affiliate” in Subpart H and Subpart I of Part 35 of the Commission’s 

regulations. The Commission seeks public comment on the rules and amended 

regulations proposed herein. 

DATES: Comments are due [Insert_Date that is 60 days after publication in the

FEDERAL REGISTER]. 

ADDRESSES: You may submit comments, identified by docket number by any of the 

following methods: 

 Agency Web Site: http://www.ferc.gov. Documents created electronically using 

word processing software should be filed in native applications or print-to-PDF 

format and not in a scanned format. 
Docket No. RM09-16-000 - 2 - 

 Mail/Hand Delivery: Commenters unable to file comments electronically must 

mail or hand deliver an original and 14 copies of their comments to: Federal 

Energy Regulatory Commission, Secretary of the Commission, 888 First Street, 

NE, Washington, DC 20426. 

FOR FURTHER INFORMATION CONTACT: 

Andrew P. Mosier, Jr. (Technical Information) 

Office of Energy Market Regulation 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

Telephone: (202) 502-6274 

Christina Hayes (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

Telephone: (202) 502-6194 

SUPPLEMENTARY INFORMATION:
130 FERC ¶ 61,046 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

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 

Docket No. RM09-16-000 

NOTICE OF PROPOSED RULEMAKING 

(January 21, 2010) 

I. Introduction

1. The Federal Energy Regulatory Commission (Commission) proposes to amend its 

regulations to provide greater certainty with respect to certain transactions in which a 

holding company acquires voting securities of a public utility. Specifically, the 

Commission proposes to amend Part 33 of its regulations to grant a blanket authorization 

under section 203(a)(2) of the Federal Power Act (FPA), as well as a parallel blanket 

authorization under section 203(a)(1), for acquisitions of 10 percent or more, but less 

than 20 percent, of the outstanding voting securities of a public utility or holding 

company, where the acquiring company files a statement certifying that such securities 

were not acquired and are not held for the purpose or with the effect of changing or 

influencing the control of the public utility and such acquiring company complies with 

certain conditions designed to limit its ability to exercise control (all as set forth in an 

Affirmation in Support of Exemption from Affiliation Requirements on FERC Form 519-

C (Affirmation), the form of which is annexed hereto as Appendix A). The Commission 
Docket No. RM09-16-000 - 2 - 

also proposes to amend Subpart H and Subpart I of Part 35 of the Commission 

regulations to define an “affiliate” of a specified company as any person that controls, is 

controlled by, or is under common control with such specified company. A public utility 

in respect of which an Affirmation has been filed would be exempt from certain 

requirements of an affiliate for purposes of the Commission’s market-based rate program, 

but only with respect to current or subsequent affiliation(s) that result from the 

transaction that is the subject of such Affirmation and only for so long as the information 

contained in the Affirmation (as modified through subsequent quarterly updates) is true, 

complete and correct and the reporting person remains in compliance with the 

commitments that are made in the Affirmation. 

II. Background

A. Overview

2. Section 203 of the FPA, as amended by the Energy Policy Act of 2005,1

 requires 

Commission authorization for mergers, and dispositions and acquisitions involving 

electric generation and transmission companies and their holding companies. The Energy 

Policy Act of 2005 expanded the Commission’s authority over corporate transactions and 

granted the Commission new regulatory tools to strengthen its ability to prevent the 

exercise of market power. The Commission has implemented rules under section 203 to 

help prevent the accumulation of either horizontal or vertical market power, while at the 

 

1

 Energy Policy Act of 2005, Pub. L. No. 109-58, §§ 1289 et seq., 119 Stat. 594 

(2005). 
Docket No. RM09-16-000 - 3 - 

same time eliminating unnecessary regulatory barriers to the making of needed 

investment in generation and transmission infrastructure. These rules are complemented 

by the rules the Commission has implemented under its market-based rate program under 

section 205 to prevent the exercise of market power in wholesale energy and capacity 

markets.2

3. The Commission has granted, both on a generic basis and on a case-by-case basis, 

blanket authorizations under section 203 where the Commission has determined that 

transactions that fall within certain parameters would be consistent with the public 

interest and would not result in inappropriate cross-subsidization.3

 While these blanket 

authorizations have facilitated transactions under section 203, the Commission must also 

consider the effect of transactions under the market-based rate program under section 

 2 Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and 

Ancillary Services by Public Utilities, Order No. 697, 72 FR 39904 (Jul. 20, 2007), 

FERC Stats. & Regs. ¶ 31,252, clarified, 121 FERC ¶ 61,260 (2007), order on reh’g, 

Order No. 697-A, 73 FR 25832 (May 7, 2008), FERC Stats. & Regs. ¶ 31,268, order on 

reh’g and clarification, 124 FERC ¶ 61,055 (2008), order on reh’g and clarification, 

Order No. 697-B, 73 FR 79610 (Dec. 30, 2008), FERC Stats. & Regs. ¶ 31,285 (2008), 

order on reh’g, Order No. 697-C, 74 FR 30924 (Jun. 29, 2009), FERC Stats. & Regs. 

¶ 31,291 (2009). 

3 See Transactions Subject to Federal Power Act 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 (Jul. 27, 2006), FERC Stats. & Regs. ¶ 31,225 

(2006). See also Goldman Sachs Group, 121 FERC ¶ 61,059 (2007), clarified, 

122 FERC ¶ 61,005 (2008) (Goldman Sachs); Capital Research & Mgmt. Co., 116 FERC 

¶ 61,267 (2006) (Capital Research). 
Docket No. RM09-16-000 - 4 - 

205. The Commission has codified its rules under the market-based rate program.4

 

Under these rules, among other things, a market-based rate seller must demonstrate that 

neither it nor its affiliates have market power in the relevant geographic market. In this 

regard, the acquisition or disposition of public utility securities under blanket section 203 

authorization may raise questions as to whether the energy assets that are directly or 

indirectly owned by an investor should be attributed to the public utility whose securities 

are acquired by the investor for purposes of the public utility’s market power analysis 

under the market-based rate program. 

B. EPSA’s Petition for Guidance

4. On September 2, 2008, the Electric Power Supply Association (EPSA) filed a 

petition requesting guidance regarding concepts of control and affiliation as they relate to 

transactions subject to the Commission’s jurisdiction under sections 203 and 205 of the 

FPA.5

 Specifically, EPSA requested that, where an investor directly or indirectly 

acquires 10 percent or more but less than 20 percent of a public utility’s outstanding 

voting securities and is eligible to file a statement of beneficial ownership with the 

 4 See Order No. 697, 72 FR 39,904 (Jul. 20, 2007), FERC Stats. & Regs. ¶ 31,252 

at P 1078-1105; Order No. 697-A, 73 FR 25,832 (May 7, 2008), FERC Stats. & Regs. 

¶ 31,268 at P 527-533. 

5

 The petition was originally docketed as EL08-87-000 and was subsequently 

redocketed as PL09-3-000. 
Docket No. RM09-16-000 - 5 - 

Securities and Exchange Commission (SEC) on SEC Schedule 13G,6

 such investment 

would not be deemed to result in a disposition of the public utility’s jurisdictional 

facilities under section 203(a)(1) of the FPA or to result in affiliation with the public 

utility for purposes of the Commission’s market-based rate requirements under section 

205 of the FPA. 

5. EPSA states that a number of recent transactions involving investments in 

publicly-held competitive power supply companies bring to light concerns about when an 

investment will result in affiliation. EPSA asserts that these concerns threaten to 

discourage investment in energy infrastructure and also create compliance issues for 

competitive power supply companies with market-based rates. 

6. EPSA states that secondary market transactions in publicly-traded securities can 

result in situations that could be deemed to result in a transaction subject to Commission 

authorization under section 203 or affiliation for market-based rate purposes. EPSA 

 6

 As relevant here, a Schedule 13G is filed with the SEC pursuant to section 13(d) 

of the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq. (2000) (1934 Act), and 

the SEC’s rules thereunder, by any person (referred to here as a “passive investor”) when 

such person has acquired beneficial ownership of more than five percent but less than 20 

percent of the outstanding voting equity securities of a company that are registered under 

section 12 of and the 1934 Act and such person certifies that it has not acquired, and does 

not hold, such securities for the purpose of or with the effect of changing or influencing 

the control of the issuer. The 20 percent limit on the acquisition of voting securities 

reflects the SEC’s view that “it would be unusual for an investor to be able to make the 

necessary certification of a passive investment purpose when beneficial ownership 

approaches 20 percent,” where the investor is not subject to other limitations. 

Amendments to Beneficial Ownership Reporting Requirements, File No. S7-16-96, 1998 

SEC LEXIS 63, at * 17 n. 20 (Jan. 12, 1998). EPSA appears to have adopted the 20 

percent limitation based on its desire to use the filing of Schedule 13G as dispositive of 

an investor’s non-control status. 
Docket No. RM09-16-000 - 6 - 

explains that such transactions can subject a public utility to potential compliance issues 

under sections 203 and 205 of the FPA since they take place without the knowledge of 

the affected public utility. 

7. EPSA’s discussion of affiliation for market-based rate purposes is based on the 

definition of an “affiliate” set forth in Order No. 697-A. That definition has been 

superseded by the definition adopted in Order No. 697-B, although the changes do not 

fundamentally alter the issues that EPSA describes. The current definition provides that 

an affiliate of a specified company is (i) any person that has a 10 percent or greater voting 

security interest in the specified company; (ii) any company that the specified company 

has a 10 percent or greater voting interest in; (iii) any person that is under common 

control with the specified company; or (iv) any person or class of persons that the 

Commission determines, after notice and opportunity for a hearing, it is necessary or 

appropriate to treat as an affiliate of the specified company either to promote the public 

interest or to protect investors and consumers. 

8. EPSA states that a number of concerns arise if one strictly applies a 10 percent or 

greater voting security interest test to determine affiliation. An upstream owner with a 10 

percent or greater voting interest in one public utility can acquire a 10 percent or greater 

voting interest in a second unaffiliated public utility and thereby create a new affiliate 

relationship between the two public utilities. EPSA states that this could trigger a need 

for section 203 filings by the acquirer and the second public utility, or only the acquiring 

company if the securities are acquired on the secondary market. 
Docket No. RM09-16-000 - 7 - 

9. In addition, the transaction could trigger a market-based rate change in status 

reporting requirement for both the first and second public utilities and their existing 

affiliates. This requirement could exist even though the affected public utilities are not 

aware that the new affiliate relations had been created. EPSA claims that the public 

utilities would thus not be in a position to make a change in status filing, even though 

failure to make a necessary filing could result in revocation of market-based rate 

authority and/or the imposition of penalties. EPSA states that the consequences could be 

even more serious if any of the entities involved is a traditional public utility with captive 

customers. Where a public utility with market-based rate authority is selling to a 

traditional public utility with captive customers and subsequently becomes affiliated with 

the traditional public utility as the result of investment by a common owner, the marketbased rate seller would become subject to the Commission’s affiliate sales restrictions, 

even though it was unaware of the new affiliate relationship. 

10. To address its concerns, EPSA requests that the Commission make three basic 

findings. First, EPSA requests that the Commission state that no control or affiliation 

exists for market-based rate or section 203 purposes where an investor holds less than 20 

percent of a public utility’s outstanding voting securities and files a Schedule 13G with 

the SEC. EPSA also requests a finding that where an investor meets these requirements 

and thus is deemed not to control the public utility or be an affiliate of it: (1) the public 

utility need not make a change in status filing in instances where it has market-based rate 

authorization; (2) subsequent market power analyses submitted in connection with either 

market-based rate authorizations or section 203 applications need not include generation 
Docket No. RM09-16-000 - 8 - 

and inputs owned or controlled by other entities in which the investor holds an interest; 

and (3) affiliate sales restrictions will not apply to transactions between a publicly-held 

company and its subsidiaries with market-based rate authorization, on the one hand, and 

other entities in which the investor has interests, on the other. 

11. EPSA recommends that the Commission rely on the SEC’s sanctions associated 

with Schedule 13G filings, and it also recommends the following additional safeguards: 

(1) as a condition to an investor’s reliance on a Schedule 13G filing as the basis for 

foregoing case-specific approval under section 203(a)(2) for particular investments, the 

investor would have to file a copy of its Schedule 13G with the Commission within 30 

days of filing it with the SEC7

; and (2) when an investor ceases to meet Schedule 13G 

eligibility requirements, it must observe the requirements of the SEC’s “cooling off 

period” while awaiting the Commission’s section 203 approval, which means that the 

investor could not acquire additional securities until prior authorization under section 203 

is granted and must refrain from voting its securities during this period. 

12. Second, EPSA requests that if the Commission finds no control for section 203 

purposes, that finding should also apply for market-based rate authorization purposes, 

 7

 EPSA notes that there may be circumstances in which an investor is either not 

subject to section 203(a)(2) (for example, because the investor is not a holding company) 

or is able to rely on some other blanket authorization under the regulations. In such 

circumstances, the investor would not need to rely on the filing of Schedule 13G for 

section 203(a)(2) purposes. Nevertheless, EPSA asserts that the publicly-held company 

(that is, the utility or its holding company whose securities are acquired) should still be 

allowed to rely upon the investor’s filing of Schedule 13G with the SEC for purposes of 

control and affiliation determinations. 
Docket No. RM09-16-000 - 9 - 

such that the transaction will not be deemed to result in affiliation for market-based rate 

purposes. This would mean that a public utility with market-based rate authority would 

not have to file a change in status if an entity that holds an interest in it has also acquired 

an interest in another utility that did not convey control. As a result, the market power 

analysis of the public utility with market-base rate authority would not include the second 

utility’s generation and inputs in any required change in status filing. 

13. Third, EPSA proposes that when an entity that is upstream of a publicly-held 

company invests in an entity that is not otherwise related to the publicly-held company, 

that investment should not be deemed to be within the knowledge and control of the 

publicly-held company’s subsidiaries that have market-based rate authorization. 

14. On December 3, 2008, Commission staff held a workshop to address the issues 

raised by EPSA. Additional comments were submitted on January 16, 2009, and EPSA 

filed a subsequent response on February 2, 2009. 

15. Calpine Corporation and Tenaska Energy, Inc. (Calpine), Mirant Corporation 

(Mirant), the Edison Electric Institute (EEI), and several other commenters generally 

support EPSA’s proposal. The Financial Institutions Energy Group (FIEG) and 

Harbinger Management Corporation (on behalf of certain affiliated investment funds) 

(Harbinger) contend that the absence of a Schedule 13G filing with the SEC does not 

necessarily indicate the existence of a control relationship. They also assert that the 

SEC’s definition of control is broader than the Commission’s view of control, which they 

contend is limited to matters involving the ability of capacity to reach the market and the 

decision-making over sales of electric energy. 
Docket No. RM09-16-000 - 10 - 

16. American Public Power Association (APPA) and National Rural Electric 

Cooperative Association (NRECA) do not oppose EPSA’s request that a determination of 

“no control” under section 203 also apply under the market-based rate program under 

section 205. But they, as well as Transmission Access Policy Study Group (TAPS) and 

American Antitrust Institute (AAI), oppose reliance on a Schedule 13G filing as the sole 

basis for finding that the investor does not control a utility in which it has invested. 

Instead, at the workshop APPA and NRECA recommended that the Commission create 

its own form to evaluate whether an investor has acquired control over a public utility. 

17. AAI raises concerns about an investor with a partial interest in rival generating 

assets, which could diminish competition and lead to a common owner serving as a 

conduit for commercially sensitive information between rivals. AAI contends that the 

Department of Justice and the FTC consider these issues of “cross-ownership” and that 

this Commission should consider these issues, as well. The FTC also encourages the 

Commission to consider issues associated with an investor’s partial ownership of 

multiple utilities and the investor’s related incentives to compete less vigorously, collude 

to avoid price wars, and share commercially sensitive information. 

III. Discussion

A. Overview of Proposal

18. As indicated above, EPSA only sought “guidance” on the issues it raised and did 

not propose a Commission rulemaking. However, in the course of considering the 

comments submitted and the discussions at the December 3, 2008 workshop, the 

Commission has determined that the issues involved may call for more formal treatment. 
Docket No. RM09-16-000 - 11 - 

In particular, an additional blanket authorization under section 203(a)(2) may be 

necessary to achieve the desired result. In addition, the approach EPSA proposed is at 

odds with aspects of the definition of an “affiliate” applicable under the Commission’s 

market-based rate regulations. Finally, the Commission finds that the Schedule 13G does 

not provide sufficient information to the Commission to monitor markets and protect the 

public interest, and therefore is proposing adoption of a form better tailored to the 

Commission’s needs. 

19. The proposed Affirmation would create a rebuttable presumption for purposes of 

section 203 that the investor does not control the public utility whose voting securities it 

has acquired. The Affirmation is a representation by the filer and does not operate as a 

conclusive finding that the investor does not control the public utility, which the 

Commission finds would be necessary for an ownership interest of 10 percent or more, 

and less than 20 percent, of the outstanding voting securities of a public utility to fall 

outside of the definition of affiliate, as used in its regulations under Part 35. 

Nevertheless, while the affected companies are still considered affiliates, under the 

Commission’s proposal, the affected companies would qualify for a waiver of certain 

regulatory requirements pertaining to an affiliate, specifically, the obligation to include 

the energy assets of the affiliate for purposes of a market power analysis, the change in 

status reporting requirement and the affiliate transaction restrictions under Part 35 of the 

Commission’s regulations. 

20. The Commission is therefore issuing this notice of proposed rulemaking. In it, we 

propose a new blanket authorization under section 203(a)(2), in Part 33, which would 
Docket No. RM09-16-000 - 12 - 

allow a holding company to acquire 10 percent or more, but less than 20 percent, of a 

public utility’s or holding company’s outstanding voting securities, provided that the 

investor files an Affirmation with the Commission on Form 519-C. The Affirmation, 

while similar to the Schedule 13G in that it would set forth the investor’s certification of 

non-control intent, has been tailored to provide additional information and to impose 

restrictions on certain activities to better meet the requirements of the FPA and 

Commission policy. In particular, as described in greater detail below, the Affirmation 

will serve as the source of information that would otherwise be required under Part 33 of 

the Commission’s regulations in an application under section 203. Further, by filing an 

Affirmation, the investor would commit to specific restrictions on its actions and to 

ongoing reporting obligations. The investor would file the Affirmation within 10 days 

following the acquisition. We believe the use of this newly developed form and the 

restrictions contained therein will help address the concerns raised by APPA, NRECA, 

AAI, TAPS, and the FTC. 

21. The Commission also proposes to amend the definition of “affiliate” in section 

35.36(a)(9) of its market-based rate program regulations.8

 As proposed to be amended, 

an “affiliate” of a specified company would mean “any person that controls, is controlled 

by, or is under common control with, such specified company.” Currently, the 

Commission’s regulations create a rebuttable presumption that a person that owns less 

 8

 As discussed below, the Commission also proposes to amend the definition of 

“affiliate” for purposes of Subpart H, Cross-Subsidization Restrictions on Affiliation 

Transactions. 
Docket No. RM09-16-000 - 13 - 

than 10 percent of the outstanding voting securities of a public utility lacks control of that 

public utility.9

 The Commission proposes to amend its regulations under Part 33 to 

provide that in any case in which 10 percent or more but less than 20 percent of the 

outstanding voting securities of a public utility are owned, the public utility would be 

exempt from certain restrictions applicable to affiliates if the acquiring person has filed 

an Affirmation and continues to comply with all of the other conditions and reporting 

obligations set forth therein. Thus, the market-based rate filing requirements, including 

the filing of a notice of change in status, would not be triggered. The Affirmation would 

allow the Commission to monitor and sanction entities that violate it. 

22. If an investor that is a public utility holding company desires to acquire 20 percent 

or more of the outstanding voting securities of a public utility, or an interest of 10 percent 

or more, but less than 20 percent that is not the subject of an Affirmation, then the 

investor would be required to file a stand-alone application under section 203(a)(2), 

unless the investor qualifies for one of the other blanket authorizations provided for in the 

regulations. 

23. As discussed above, EPSA notes that an investor’s acquisition of the voting 

securities of a public utility with market-based authorization could trigger the need for 

change in status filings by both the public utility whose securities are acquired and by any 

other public utility affiliate of the investor. This requirement could exist even though the 

affected public utilities are not aware that the new affiliate relations had been created. 

 9

 18 CFR 35.36(a)(9)(v) (2009).
Docket No. RM09-16-000 - 14 - 

EPSA further states that the public utilities would thus not be in a position to make a 

change in status filing, even though failure to make a necessary filing could result in 

revocation of market-based rate authority and/or the imposition of penalties. The 

consequences could be even more serious if any of the entities involved is a traditional 

public utility with captive customers. Where a public utility is selling to a traditional 

public utility with captive customers and subsequently becomes affiliated with the 

traditional public utility as the result of investment by a common owner, the public utility 

would become subject to the Commission’s affiliate sales restrictions, even though it was 

unaware of the new affiliate relationship. 

24. In light of these concerns and the fact that the Commission’s rules require certain 

information regarding affiliates from market-based rate sellers and impose certain 

restrictions on transactions between affiliates in order to ensure that rates are just and 

reasonable, we believe that the holding company whose acquisition of voting securities of 

a public utility results in affiliations between or among public utilities is in the best 

position to facilitate an affected public utility’s compliance with the Commission’s 

regulations pertaining to affiliate relationships. For instance, the holding company may 

be in the best position to provide to an affected public utility certain information 

regarding the holding company’s investments in other utilities with which the affected 

public utility would be deemed affiliated, in order to enable the affected public utility to 

comply with our regulatory requirements regarding affiliate relationships. 

25. As EPSA notes, since a public utility with market-based rate authority that fails to 

comply with market-based rate reporting requirements may risk losing its market-based 
Docket No. RM09-16-000 - 15 - 

authorization, and a public utility that fails to comply with our requirements relating to 

affiliate transactions may be subject to penalties, we expect that a holding company 

whose investment has created the affiliate relationship between and among affected 

public utilities would also have an economic incentive to preserve the market-based rate 

authority of a public utility in which it has invested, and to ensure that a public utility in 

which it has invested is in compliance with our regulations. A holding company may 

elect to file the Affirmation in order to relieve the public utility of its obligation to report 

certain information regarding its affiliations through the holding company investor, and 

to assist the public utility in complying with our regulations pertaining to affiliate 

relationships resulting from the investment by the holding company. 

B. Section 203

1. Requirements of Section 203

26. Section 203(a)(1) of the FPA requires prior Commission authorization for a public 

utility to (A) sell, lease, or otherwise dispose of its facilities; (B) merge or consolidate its 

facilities with any other person; (C) purchase, acquire, or take any security in excess of 

$10 million of any other public utility; or (D) purchase, lease, or otherwise acquire an 

existing generation facility valued in excess of $10 million and that is used in interstate 

wholesale sales and over which the Commission has ratemaking jurisdiction.10 

27. Section 203(a)(2) requires prior Commission authorization for a holding company 

in a holding company system that includes a transmitting utility or an electric utility to 

 10 16 U.S.C. § 824b (2006). 
Docket No. RM09-16-000 - 16 - 

purchase, acquire, or take any security with a value in excess of $10 million of 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 with a 

value in excess of $10 million. 

28. The Commission must approve an application under section 203 if it finds the 

proposed transaction is consistent with the public interest, and will not result in crosssubsidization of a non-utility associate company or any pledge or encumbrance against 

utility assets for the benefit of an associate company, unless the cross-subsidization or 

pledge or encumbrance are found to be consistent with the public interest. The 

Commission’s analysis of whether a transaction is consistent with the public interest 

generally involves consideration of three factors: (1) the effect on competition; (2) the 

effect on rates; and (3) the effect on regulation.11 The Commission’s regulations 

establish verification and informational requirements for applicants that seek a 

determination that a transaction will not result in inappropriate cross-subsidization or 

pledge or encumbrance of utility assets.12

 11 See Inquiry Concerning the Commission’s Merger Policy Under the Federal 

Power Act: Policy Statement, Order No. 592, 61 FR 68595 (Dec. 30, 1996), FERC Stats. 

& Regs. ¶ 31,044 (1996), reconsideration denied, Order No. 592-A, 79 FERC ¶ 61,321 

(1997) (Merger Policy Statement); see also Revised Filing Requirements Under Part 33 

of the Commission’s Regulations, Order No. 642, 65 FR 70984 (Nov. 28, 2000), FERC 

Stats. & Regs., Regulations Preambles July 1996-Dec. 2000 ¶ 31,111 (2000), order on 

reh’g, Order No. 642-A, 94 FERC ¶ 61,289 (2001). 

12 18 CFR 33.2(j). 
Docket No. RM09-16-000 - 17 - 

2. Existing Blanket Authorizations and Case-Specific Approvals

29. Under section 203(a)(5), the Commission is authorized to identify classes of 

transactions that meet these standards and provide expedited review for such transactions. 

Pursuant to this authority, the Commission has granted blanket authorizations in its 

regulations, thereby pre-authorizing certain transactions.13 However, as it is an ex ante

determination as to the appropriateness of a category of transactions under section 203, a 

blanket authorization can be granted only after the Commission is assured that the 

statutory standards will be met, including ensuring that the interests of captive customers 

are safeguarded and that public utility assets are protected under all circumstances.14

30. For instance, a blanket authorization has been granted under section 203(a)(2) for 

an acquisition of less than 10 percent of the outstanding voting securities of a public 

utility.15 In granting a blanket authorization for acquisitions of less than 10 percent of the 

voting securities of a utility, the Commission determined that such a blanket 

authorization would be consistent with the public interest and Congressional intent in 

repealing the Public Utility Holding Company Act of 1935 (PUHCA 1935) and 

 13 See Order No. 669, FERC Stats. & Regs. ¶ 31,200, at P 141 (2005), order on 

reh’g, Order No. 669-A, FERC Stats. & Regs. ¶ 31,214 at P 55-133, order on reh’g, 

Order No. 669-B, FERC Stats. & Regs. ¶ 31,225, at P 24-44 (2006). See also Order No. 

708, 73 FR 11003 (Feb. 29, 2008), FERC Stats. & Regs. ¶ 31,265, order on reh’g, Order 

No. 708-A, 73 FR 43066 (Jul. 24, 2008), FERC Stats. & Regs. ¶ 31,273 (2008). 

14 FPA Section 203 Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253 

at P 33 (2007). 

15 18 CFR 33.1(c)(2)(ii). 
Docket No. RM09-16-000 - 18 - 

encouraging incentives for additional investment.16 In considering a parallel blanket 

authorization under section 203(a)(1), the Commission declared a general policy, to be 

applied on a case-by-case basis, of presuming that a transfer of less than 10 percent of a 

public utility’s outstanding voting securities is not a transfer of control if: (1) after the 

transaction, the acquirer and its affiliates and associate companies, directly or indirectly, 

in aggregate will own less than 10 percent of the outstanding voting securities of such 

public utility; and (2) the facts and circumstances do not indicate that such companies 

would be able to directly or indirectly exercise a controlling influence over the 

management or policies of the public utility.17

31. In several recent section 203 cases, the Commission has relied upon an applicant’s 

eligibility to file statements of beneficial ownership with the SEC on Schedule 13G as 

one factor in the Commission’s section 203 analysis of control.18 Under section 13(d)(1) 

of the 1934 Act and the SEC’s rules thereunder,19 any person who acquires beneficial 

ownership of more than five percent of any voting equity security of a class that is 

registered under section 12 of the 1934 Act (which would include securities that are listed 

 16 Order No. 669, FERC Stats. & Regs. ¶ 31,200 at P 145. 

17 FPA Section 203 Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253 

at P 57. 

18 See, e.g., Horizon Asset Mgmt., Inc., 125 FERC ¶ 61,209, at P 45-50 (2008) 

(Horizon); Goldman Sachs, 121 FERC ¶ 61,059 at P 30-41; Morgan Stanley, 121 FERC 

¶ 61,060, at P 37-49 (2007), clarified, 122 FERC ¶ 61,094 (2008) (Morgan Stanley); 

Legg Mason, Inc., 121 FERC ¶ 61,061, at P 26-30 (2007) (Legg Mason); Capital 

Research, 116 FERC ¶ 61,267 at P 16-20. 

19 17 CFR 240.13d-1 et seq.
Docket No. RM09-16-000 - 19 - 

for trading on a national securities exchange) must, within 10 days of such acquisition, 

file a statement on SEC Schedule 13D with the SEC containing information about the 

acquiring person and the amount of securities acquired, the source of the funds used to 

complete the acquisition, whether the purpose for the acquisition is to acquire control, 

and whether there are any contracts or understandings with respect to the securities 

acquired relating to various types of transactions, and such other information as the SEC 

may by rules and regulations prescribe as necessary and appropriate in the public interest 

or for the protection of investors. However, as noted above, the SEC’s rules allow socalled “passive investors” to instead file a much abbreviated disclosure statement on 

Schedule 13G. 20 

32. A “passive investor” filing Schedule 13G certifies only that the securities that are 

the subject of the filing “were not acquired and are not held for the purpose of or with the 

effect of changing or influencing the control of the issuer of the securities and were not 

acquired and are not held in connection with or as a participant in any transaction having 

that purpose or effect.” The SEC defines “control” as “the possession, direct or indirect, 

of the power to direct or cause the direction of the management and policies of a person, 

whether through the ownership of voting securities, by contract, or otherwise.”21 The 

Schedule 13G also does not provide information regarding the investor’s other holdings. 

While the Commission has considered an applicant’s eligibility to file a Schedule 13G 

 20 See 17 CFR 240.13d-1(c). See also discussion at n.6. 

21 17 CFR 240.12b-2. 
Docket No. RM09-16-000 - 20 - 

with the SEC an indication that the applicant will not be able to assert control over a 

public utility, the Commission has not accepted Schedule 13G eligibility as a definitive 

statement regarding control.22

3. Proposal

33. The Commission proposes to amend 18 CFR Part 33 (Applications Under Federal 

Power Act section 203) to provide a new blanket authorization under section 203(a)(2) 

for a holding company to acquire 10 percent or more, but less than 20 percent, of the 

outstanding voting securities of a public utility, provided that the holding company files 

an Affirmation, on Form 519-C, within 10 days of the acquisition of such voting 

securities. The Affirmation would create a rebuttable presumption for purposes of 

section 203 that the investor does not control the public utility where the holding 

company acquires 10 percent or more, but less than 20 percent of the voting securities of 

the public utility. Therefore, the Commission believes that the acquisition by the holding 

company, and the disposition by the public utility, of 10 percent or more, but less than 20 

percent of voting securities, with the filing of the Affirmation, will not harm competition, 

rates, regulation or captive customers. However, as explained above, the Affirmation is a 

representation by the filer and does not operate as a conclusive finding that the investor 

does not control the public utility, which the Commission finds would be necessary for an 

ownership interest of 10 percent or more, and less than 20 percent, of the outstanding 

voting securities of a public utility to fall outside of the definition of affiliate. Thus, 

 22 FPA Section 203Supplemental Policy Statement, FERC Stats. & Regs. ¶ 31,253, 

at P 41. 
Docket No. RM09-16-000 - 21 - 

while the affected companies are still considered technically affiliates, the affected 

companies would qualify for a waiver of the regulatory requirements pertaining to 

affiliated companies. The Commission seeks comments on this proposal. 

34. The Commission also proposes to amend 18 CFR Part 33 to provide a parallel 

blanket authorization under FPA section 203(a)(1). Under the proposed section 203(a)(1) 

blanket authorization, a public utility whose outstanding voting securities are acquired in 

a transaction that falls within the proposed 203(a)(2) blanket authorization would be preauthorized under 203(a)(1) to dispose of those securities. We believe that these new 

blanket authorizations, along with the proposed revised definitions of “affiliate” in Part 

35 discussed in further detail below, will address EPSA’s concerns, while at the same 

time provide the Commission with a mechanism to ensure that acquisitions are consistent 

with the public interest under section 203, are subject to effective monitoring, and do not 

present concerns under the Commission’s market-based rate program. We believe that 

this proposal also addresses concerns raised by the FTC, APPA/ NRECA, AAI, and 

TAPS, because the Affirmation will require the investor to abide by commitments to not 

take specific actions that would unduly influence the management of the utility, interfere 

with the operation of the utility’s facilities, or request or receive non-public information. 

We seek comments on this proposal. 

a. Affirmation in Support of Exemption from Affiliation 

Requirements

35. EPSA’s proposal relies on the filing of SEC Schedule 13G to demonstrate 

conclusively that an investor will not control the public utility in which it has invested. 
Docket No. RM09-16-000 - 22 - 

While the Commission has relied on these filings, in conjunction with other conditions 

and reporting requirements in the past for various purposes, we believe the Commission 

could better fulfill its statutory responsibilities if it did not rely exclusively on the 

Schedule 13G. The primary regulatory purpose of the beneficial ownership disclosure 

requirements under section 13(d) of the 1934 Act is to provide companies and their 

shareholders with information about large accumulations of a company’s stock, which 

could be indicative of a possible takeover attempt which, in turn, could affect the market 

value of the issuer’s securities. The requirements of section 13(d) do not bar an investor 

from acquiring control of a company, which is of utmost importance to this Commission. 

36. Therefore, the Commission proposes that, to be eligible for the new blanket 

authorizations, the investor must file an Affirmation, which, as more fully described 

below, will serve a similar purpose to SEC Schedule 13G. As is the case with Schedule 

13G, the investor, by signing the Affirmation, certifies that the securities referred to in 

the filing were not acquired and are not held for the purpose of or with the effect of 

changing or influencing the control of the issuer of the securities and were not acquired 

and are not held in connection with or as a participant in any transaction having that 

purpose or effect. The Affirmation will provide information on the number of shares of 

voting securities (and percent of the total shares outstanding) of the public utility in 

respect of which the statement is filed. In addition, the Affirmation must include the 

name and location of any other public utility that is an affiliate of the investor and a 

description and the location of “inputs to electric power production” (as defined in 

section 35.36(a)(4) of the Commission’s regulations) that are owned or controlled by the 
Docket No. RM09-16-000 - 23 - 

investor or by any affiliate of the investor. This latter information (which would not be 

disclosed in a Schedule 13G filing) will assist the Commission in its task of ensuring that 

investment in a public utility does not, in fact, create opportunities or incentives for the 

investor or the public utility to engage in anti-competitive conduct. To be eligible for the 

blanket authorizations, an investor would need to file an Affirmation for each public 

utility in which the investor acquired securities. 

37. In addition, by filing an Affirmation, the investor makes certain additional 

commitments. Specifically, the investor certifies that the acquisition was not for the 

purpose, or with the effect, of changing or influencing control over the public utility, and 

also commits: 

 not to seek or accept representation on the public utility’s board of directors or 

otherwise serve in any management capacity; 

 not to request or receive non-public information, either directly or indirectly, 

concerning the business or affairs of the public utility; 

 not to solicit, or participate in any solicitation of, proxies involving the public 

utility; and 

 not to seek to influence the management or conduct of the day-to-day operations 

of the public utility in such areas as 

o purchasing or selling electricity or inputs to generation, 

o scheduling power production, including, but not limited to, the dispatching 

of generation units or scheduling outages, 
Docket No. RM09-16-000 - 24 - 

o hiring or fixing compensation of the public utility’s officers, directors and 

employees.23

It is not intended that these restrictions would preclude the exercise of voting rights on 

any matter properly submitted for a vote of shareholder. 

38. We propose to require that the Affirmation be filed within 10 days after the 

acquisition, that a copy thereof be provided to the company whose securities have been 

acquired, and that the information provided on share ownership in the initial filing be 

updated quarterly.24 

39. Consistent with the case-specific blanket authorizations under section 203(a)(2),25

the Commission believes that a blanket authorization for the acquisition of 10 percent or 

more, but less than 20 percent, of the outstanding voting securities of a utility, limited by 

the commitments of non-control set forth in the proposed Affirmation, would not result in 

 23 These restrictions are similar to, and in fact, based on, restrictions that the 

Commission has imposed in orders approving 10 percent or greater investments in 

utilities. See Cascade Investment, LLC, 129 FERC ¶ 61,011, at P 20-21 (2009); Mach 

Gen, LLC, 127 FERC ¶ 61,127, at P 24-31 (2009); Franklin Resources, Inc., 126 FERC 

¶ 61,250, at P 21 (2009), order on reh’g, 127 FERC ¶ 61,224 (2009); Entegra Power 

Group LLC, 125 FERC ¶ 61,143, at P 40 (2008), order on clarification and reh’g denied, 

129 FERC ¶ 61,156 (2009). 

24 This ongoing reporting obligation is also consistent with other Part 33 reporting 

requirements, as well as quarterly reporting obligations that the Commission routinely 

imposes under its section 203 orders granting blanket authorizations. See, e.g., 18 CFR 

33.1(c)(4); Horizon, 125 FERC ¶ 61,209 at P 49; Goldman Sachs, 122 FERC ¶ 61,005 

(2008). 

25 See Horizon, 125 FERC ¶ 61,209; Capital Research, 116 FERC ¶ 61,267 

(2006). 
Docket No. RM09-16-000 - 25 - 

any adverse effect on competition, rates, or regulation, or result in cross-subsidization of 

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

benefit of an associate company. Under the companion blanket authorization under 

section 203(a)(1) that we are proposing, a public utility whose securities are acquired in a 

transaction that falls within the proposed 203(a)(2) blanket authorization would have no 

obligation to seek approval under section 203(a)(1). This parallel treatment of control 

issues under section 203(a)(1) with blanket authorizations under section 203(a)(2) 

follows the same approach that we have previously taken in Part 3326 and is also 

consistent with blanket authorizations that we have granted by order.27

b. Administration of Proposed Affirmation in Support of 

Exemption from Affiliation Requirements

40. Given the nature of the transaction, the limited ownership interest of the reporting 

person, and the continuing nature of the conditions and reporting obligations imposed (as 

described above), the Affirmation will enable the Commission to monitor the new 

affiliations that are created and provide the Commission with a sufficient basis to 

conclude that a transaction that is the subject of an Affirmation is consistent with the 

public interest because it will not have an adverse effect on competition, rates or effective 

regulation, or result in inappropriate cross-subsidization or an inappropriate pledge or 

encumbrance of utility assets. The Commission believes that the information, 

 26 See, e.g., 18 CFR 33.1(c)(11)-(15). 

27 See, e.g., Morgan Stanley, 121 FERC ¶ 61,060 at P 34; Legg Mason, 121 FERC 

¶ 61,061 at P 18. 
Docket No. RM09-16-000 - 26 - 

representations and commitments required of, and the conditions imposed on, the filer of 

the Affirmation (including the obligation to file quarterly updates to ownership of the 

issuer’s voting securities) are consistent with those requirements imposed on an applicant 

seeking case-by-case section 203 authorization for a similar transaction. Specifically, the 

information provided in the Affirmation is the same or similar to the information that 

would be required by section 33.2(a) of the Commission’s regulations (name and 

business address of the reporting person), section 33.2(c)(2) (identity of and ownership 

interests in other energy affiliates), section 33.2(e) (description of the transaction, which, 

in the particular circumstances covered by the proposed new blanket authorization, would 

always be an acquisition of 10 percent or more but less than 20 percent of the issuing 

public utility’s outstanding voting securities), and section 33.2(i) (other regulatory 

approvals). Other specific information requirements of an application under section 203 

are unnecessary in the case of any transaction that is the subject of an Affirmation. For 

example, specific disclosure otherwise required by section 33.2(c)(5) of the 

Commission’s regulations (identity of common officers or directors of parties to the 

transaction) is unnecessary since such management interlocks are precluded by the 

conditions imposed on the reporting person under the Affirmation. Similarly, statements 

concerning the impact of the transaction on the public interest and on competition, rates 

and regulation and whether the transaction will result in inappropriate cross-subsidization 

or an inappropriate pledge or encumbrance of utility assets, which would be required by 

sections 33.2(g) and 33.2(j) of the Commission’s regulations in an application under 

section 203, are unnecessary given the specific conditions and restrictions imposed on the 
Docket No. RM09-16-000 - 27 - 

reporting person. Finally, the information contained in the initial Affirmation and 

quarterly updates will provide the Commission with the means to monitor the new 

affiliations created by any transaction that is the subject of an Affirmation and, to take 

further action as necessary. 

41. The Commission seeks further comments on the procedures that should be in place 

to protect consumers and the marketplace if an investor, having filed an Affirmation, no 

longer can comply, or wishes not to comply, with the commitments made in the 

Affirmation. In the context of section 203, the Commission is proposing that, in any such 

case, the investor may file an application under section 203 to request authorization to 

retain the securities previously acquired under the blanket authorization if the investor 

determines that it no longer wishes to be bound by the terms of the commitments it has 

made in the Affirmation. During the pendency of any such proceeding, the investor may 

not acquire any additional voting securities of the public utility and must continue to 

comply with all of the commitments made in the Affirmation. In addition, depending on 

the final disposition of the section 203 application, the public utility may be required to 

file a notice of change in status and the restrictions on affiliate transactions may become 

applicable. 

c. Applicability of Proposed Blanket Authorization

42. EPSA’s request for guidance related only to acquisitions of voting securities of 

publicly-held companies, that is, securities that are registered under section 12 of the 

1934 Act and, therefore, subject to the beneficial ownership reporting requirements of 

section 13(d) of the 1934 Act. The Commission’s proposed blanket authorization, 
Docket No. RM09-16-000 - 28 - 

however, makes no distinction between the securities of publicly-traded utilities or 

securities of privately-held utilities. On the one hand, this approach might be reasonable 

because the distinction between public utilities whose securities are publicly-held and 

public utilities whose securities are privately-held is not critical to the issues of control 

presented under the FPA, and the affirmations and ongoing commitments made in the 

form of Affirmation annexed hereto are not in any way dependent upon the status of the 

issuer as a publicly-held company. We note that Harbinger argues that the distinction 

that EPSA would make between publicly-traded securities and securities of privately-held 

companies would lead to a nonsensical situation, namely, that in the case where an 

investor owns interests in both non-publicly-held and publicly held utilities, the nonpublicly-held utility would have to presume an affiliation that the publicly-held utility 

would not.28 

43. On the other hand, expanding EPSA’s request to apply to voting securities of 

privately-held utilities may impact existing blanket authorizations and their related 

conditions. For example, if the blanket authorizations under section 203 that we are 

proposing today could be relied upon for transactions that have previously been 

authorized by order,29 then the conditions imposed in those orders, to limit the adverse 

 

(continued...) 

28 Harbinger comments at 16-17 (EL08-87-000) (September 30, 2008). 

29 Specifically, in a series of orders, the Commission granted blanket 

authorizations for a period of two years for acquisitions and holdings of up to 20 percent 

of the voting securities of certain public utilities. Although the Commission made no 

findings on whether the acquisition of securities would result in a transfer of control of 

the public utility, it imposed conditions to address concerns over transfers in control and 
Docket No. RM09-16-000 - 29 - 

impact on competition and create transparency through reporting requirements, would 

arguably no longer apply.30 

44. As proposed herein, the proposed blanket authorizations make no distinctions 

between the securities of publicly-traded utilities or securities of privately-held utilities. 

The Commission invites comment on whether its proposed blanket authorizations under 

section 203 should be limited to acquisitions of voting securities of publicly-traded 

utilities, or whether the proposed blanket authorizations should apply to acquisitions of 

voting securities of privately-traded companies as well. 

45. Further, although the affiliate compliance issues that EPSA focused on in its 

petition result largely from secondary market purchases of a public utility’s voting 

securities, the rules that we are proposing under Part 33 make no distinctions between 

secondary market purchases and direct acquisitions of securities from the issuing public 

utility. The Commission invites comment on whether the proposed blanket 

 

potential adverse effects on competition. Among these conditions is a requirement that 

the acquiring party must be a financial-type entity and not primarily engaged in an 

energy-related business. The Commission also restricted the acquiring party from 

holding more than five percent of another jurisdictional asset within the same market 

area. In addition, the Commission imposed certain reporting requirements on the public 

utility disposing of its securities under such a blanket authorization. See, e.g., Entegra 

Power Group, LLC, 115 FERC ¶ 62,038 (2006) (delegated letter order); MACH Gen, 

LLC, 113 FERC ¶ 61,138 (2005). 

30 Because the securities of these companies are traded privately and therefore 

there is less transparency of ownership interests, the Commission conditioned approval of 

requests for authorizations by imposing reporting requirements. MACH Gen, 113 FERC 

¶ 61,138 at P 40. 
Docket No. RM09-16-000 - 30 - 

authorizations under section 203 should be limited to secondary market transactions or 

should apply regardless of the form of the transaction. 

d. Filing of Affirmation in Support of Exemption from 

Affiliation Requirements

46. Most filings made under the blanket authorizations in Part 33 are submitted in 

dockets established for each blanket authorization, which are updated by year. For 

instance, a Schedule 13D, Schedule 13G, or Form 13F filed under 18 CFR § 33.1(c)(4) 

would be submitted in Docket No. HC09-5, if submitted in 2009, and Docket No. HC10-

5, if submitted in 2010. For consistency, the Commission is proposing that one docket 

should be established for filing of all Affirmations and quarterly updates. In addition, 

because the acquisition of 10 percent or more of the outstanding voting securities of a 

public utility is likely to have broad implications for that company, the Commission is 

also proposing that the filer of an Affirmation be required to provide a paper copy of the 

Affirmation to the public utility whose securities are acquired at the same time as it is 

filed with the Commission. The Commission invites comment on these proposals. 

C. Definition of Affiliate 

1. Market-Based Rate Program

a. Market Power Analysis

47. Under the market-based rate regulations, an “affiliate” of a specified company 

includes, among other things, “[a]ny person that is under common control with the 
Docket No. RM09-16-000 - 31 - 

specified company.”31 The Commission allows power sales at market-based rates if the 

seller and its affiliates lack or have adequately mitigated both horizontal and vertical 

market power. The Commission adopted two indicative screens for assessing horizontal 

market power, the pivotal supplier screen and the wholesale market share screen, both of 

which consider the generation assets owned or controlled by the seller and its affiliates. 

If a seller passes both of the screens, there is a rebuttable presumption that the seller lacks 

horizontal market power. 

48. To demonstrate a lack of vertical market power, a seller that owns, operates or 

controls transmission facilities, or whose affiliates own, operate or control transmission 

facilities, must have an Open Access Transmission Tariff (OATT) on file with the 

Commission. The Commission also considers a seller’s ability to erect other barriers to 

entry as part of the vertical market power analysis. The Commission requires a seller to 

provide information describing its ownership or control of, or affiliation with an entity 

that owns or controls, inputs to electric power production.32 A seller must also make an 

affirmative statement that it has not erected barriers to entry into the relevant market and 

will not erect barriers to entry into the relevant market. 

 31 Order No. 697-A, 73 FR 25832 (May 7, 2008), FERC Stats. & Regs. ¶ 31,268, 

at P 182-83. “[O]wning, controlling or holding with power to vote, less than 10 percent 

of the outstanding voting securities of a specified company creates a rebuttable 

presumption of lack of control.” 18 CFR 35.36(a)(9)(E). 

32 Inputs to electric power production means intrastate natural gas transportation, 

intrastate natural gas storage or distribution facilities; sites for generation capacity 

development; physical coal supply sources and ownership or control over who may 

access transportation of coal supplies. 
Docket No. RM09-16-000 - 32 - 

b. Change in Status Reporting

49. As a condition of obtaining and retaining market-based rate authority, sellers must 

timely report to the Commission “any change in status that would reflect a departure from 

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

authority.”33 The Commission clarified in Order No. 697 that the change in status 

requirements are intended to track the requirements embedded in the horizontal and 

vertical analyses and the affiliate abuse representations.34 Market-based rate sellers are 

required to file notices of change in status for ownership or control of generation capa

that results in net increases of 100 MW or more, or of inputs to electric power productio

or ownership, operation or control of transmission facilities. In addition, “[a]ffiliation 

with any entity not disclosed in the application for market-based rate authority that ow

or controls generation facilities or inputs to electric power production, affiliation with any

entity not disclosed in the application for market-based rate authority that owns, op

or controls transmission facilities, or affiliation with any entity that has a franchised 

service area” are reportable changes in status.

city 

n, 

ns 

erates 

e seller.36

 

35 In Order No. 652, the Commission 

concluded that the reporting obligation should extend only to changes in circumstances 

within the knowledge and control of th

33 18 CFR 35.42(a). 

34 See Order No. 697, 72 FR 39904 (Jul. 20, 2007), FERC Stats. & Regs. ¶ 31,252 

at P 1018. 

35 18 CFR 35.42(a)(2). 

36 Reporting Requirement for Changes in Status for Public Utilities with Market-

(continued...) 
Docket No. RM09-16-000 - 33 - 

50. When submitting a notice of change in status regarding a change that impacts the 

pertinent assets held by a seller or its affiliates with market-based rate authorization, a 

seller must also include an asset appendix, which lists the filing entity and all of its 

energy affiliates and their associated generation assets as well as electric transmission 

assets, natural gas intrastate pipelines, and gas storage facilities owned or controlled by 

the entity or its energy affiliates.37 

c. Affiliate Restrictions

51. The concept of affiliation is also important in determining the scope of the 

Commission’s restrictions on affiliate transactions. The Commission has adopted 

restrictions on affiliates in the market-based rate regulations.38 These regulations govern 

power sales, sales of non-power goods and services, separation of functions, and 

information sharing between franchised public utilities with captive customers and their 

market-regulated power sales affiliates. 

52. The Commission has also adopted cross-subsidization restrictions on affiliate 

transactions in Subpart I of its regulations, as discussed further below.39 These 

regulations govern power and non-power goods and services transactions between 

 

Based Rate Authority, Order No. 652, 70 FR 8253 (Feb. 18, 2005), FERC Stats. & Regs. 

¶ 31,175, at P 27 (2005), order on reh’g, 111 FERC ¶ 61,413 (2005). 

37 Part 35, Subpart H, Appendix B. An asset appendix is required for new marketbased rate applications and updated market analyses. 

38 These rules are codified at 18 CFR 35.39. 

39 These rules are codified at 18 CFR 35.43 and 35.44. 
Docket No. RM09-16-000 - 34 - 

franchised public utilities with captive customers and their market-regulated power sales 

and non-utility affiliates. 

53. Both sets of rules regulate affiliate transactions to address the Commission’s 

concern that a franchised public utility and an affiliate may be able to engage in 

transactions in ways that transfer benefits from the captive customers of the franchised 

public utility to the affiliate and its shareholders.40 Any changes to the definition of 

affiliate would necessarily affect the scope of both of these sets of restrictions. 

d. Other Implications of Affiliation in the Market-Based 

Rate Program

54. Affiliation also plays a key role in determining whether a seller qualifies as a 

Category 1 Seller, a limited category that is exempt from the requirement of filing a 

regularly scheduled updated market power analysis every three years.41 A Category 1 

Seller cannot be affiliated with an entity that owns, operates or controls transmission 

facilities in the same region as the seller’s generation assets and cannot be affiliated with 

a franchised public utility in the same region as the seller’s generation assets. Moreover, 

a Category 1 Seller can only own or control 500 MW or less of generation in a region. 

Affiliate generation is included in the 500 MW or less determination. Finally, in order to 

qualify as a Category 1 Seller, a seller cannot raise “other vertical market power issues.” 

 40 For a discussion see Cross-Subsidization Restrictions on Affiliate Transactions, 

Order No. 707, 73 FR 11013 (Feb. 29, 2008), FERC Stats. & Regs. ¶ 31,264, at P 4-5, 

order on rehearing, Order No. 707-A, 73 FR 43072 (Jul. 24, 2008), FERC Stats. & Regs. 

¶ 31,272 (2008). 

41 18 CFR 35.36(a)(2). 
Docket No. RM09-16-000 - 35 - 

In that regard, the Commission will consider whether the seller’s affiliate has holdings 

that raise vertical market power issues and can erect barriers to entry. 

2. Cross-Subsidization Restrictions on Affiliate Transactions

55. In Order No. 707, the Commission added Subpart I to Part 35 of its regulations to 

codify affiliate restrictions applicable to all power and non-power goods and services 

transactions between franchised public utilities with captive customers and their marketregulated power sales and non-utility affiliates. The Commission also promulgated 

pricing restrictions on the sale of non-power goods and services.42 For purposes of 

Subpart I, the Commission also adopted a definition of “affiliate.”43 As is the case with 

the definition of “affiliate” in Subpart H, an “affiliate” of a specified company for 

purposes of Subpart I includes “[a]ny person that is under common control with the 

specified person.”44

 42 These rules are codified at 18 CFR 35.44. 

43 18 CFR 35.43(a)(1). 

44 18 CFR 35.43(a)(1)(D). The definitions of the term “affiliate” in Subpart H and 

Subpart I differ in other respects, such as the definition in Subpart I has a five percent 

threshold for affiliation for exempt wholesale generators, due principally to the fact that 

definitions were adopted in parallel rulemakings that were not synchronized. As 

discussed below, the Commission is proposing herein to conform the definition of 

“affiliate” used in Subpart I to the definition (as proposed to be amended) used in Subpart 

H. The five percent threshold for affiliation for exempt wholesale generators under 

Subpart H was eliminated in Order No. 697-B, FERC Stats. & Regs. ¶ 31,285, at P 48, 

and we propose to eliminate that separate threshold under Subpart I here, for the same 

reasons. 
Docket No. RM09-16-000 - 36 - 

3. Proposal

56. Under the Commission’s current rules, an investor is an “affiliate” of a public 

utility if it “owns, controls, or holds with power to vote” 10 percent or more of the public 

utility’s outstanding voting securities. Also under this analysis, the public utility is 

considered to be an affiliate of the investor, and two companies under common control 

are also considered affiliates. Owning, controlling or holding with power to vote less 

than 10 percent of the outstanding voting securities of a specified public utility company 

creates a rebuttable presumption of lack of control. 

57. The Commission proposes to modify this definition so that an affiliate relationship 

exists when an investor is able to control a public utility. The proposed definition also 

provides that the Commission may, after appropriate notice and opportunity for hearing, 

determine that any person is an affiliate of a specified company if it finds that such 

person exercises directly or indirectly (either alone or pursuant to an arrangement or 

understanding with one or more persons) such a degree of influence (through ownership 

of voting securities or otherwise) over the management or policies or operations of the 

specified company as to make it necessary or appropriate in the public interest that the 

person be treated as an affiliate. Owning, controlling, or holding with power to vote less 

than 10 percent of the outstanding voting securities would continue to create a rebuttable 

presumption of lack of control. 

58. Under the proposed amendments to Part 33, owning, controlling, or holding with 

power to vote 10 percent or more, but less than 20 percent, of the outstanding voting 

securities, as long as the Affirmation had been filed within 10 days after the acquisition, 
Docket No. RM09-16-000 - 37 - 

would create an affiliate relationship, but would qualify for a waiver of the regulatory 

requirements pertaining to affiliated companies. 

59. As a consequence of this modified definition, a public utility subject to the 

Affirmation in Part 33 would not be required to file a notice of change in status or include 

the investor or the investor’s other affiliates in its market power analysis, and would not 

be subject to the affiliate transaction rules for transactions with the investor or the 

investor’s other affiliates. The Commission proposes these changes because it believes 

that the commitments required by the Affirmation, and the Commission’s related 

enforcement of those commitments, will be rigorous enough to ensure adequate oversight 

of public utilities and protection of utility customers. 

60. The Commission proposes to adopt the same definition of “affiliate” for purposes 

of the cross-subsidization rules in Subpart I so that the definitions of “affiliate” in 

Subparts H and I are consistent. We believe that the proposed changes to the definition 

of “affiliate” in the cross-subsidization regulations will not adversely impact our ability to 

protect against cross-subsidization. In connection with these changes, the Commission is 

also proposing to add a definition of “voting security” to both section 35.36 and section 

35.43. As proposed, the term “voting security” would mean “any security presently 

entitling the owner or holder thereof to vote in the direction or management of the affairs 

of a company.” This is the same meaning as given under the Public Utility Holding 

Company Act of 2005.45 Comment is also requested on this proposal. 

 45 42 U.S.C. § 16451(17) (2006); see also AES Creative Resources, L.P., 

(continued...) 
Docket No. RM09-16-000 - 38 - 

61. We note that this framework will apply to public utilities whose outstanding 

voting securities have been acquired by a holding company that has filed an Affirmation 

as part of the blanket authorization under section 203. However, where the investor is 

not a holding company and therefore not subject to section 203(a)(2), the investor will 

not have filed an Affirmation with the Commission, and the public utility will be 

affiliated with the investor and its other holdings,46 raising concerns related to the 

requirements of the market-based rate program discussed above. To address this 

situation, the Commission proposes to allow investors that are not subject to the blanket 

authorizations proposed above to also file the Affirmation with the Commission. Such an 

investor may have an incentive to file the Affirmation to protect the market-based rate 

authorization of the public utility in which it has invested. The public utility would then 

be relieved of the requirements discussed above. The Commission invites comment on 

its proposal. 

IV. Information Collection Statement

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

approve certain information collection and data retention requirements imposed by 

 

129 FERC ¶ 61,239, at P 24 (2009) (confirming that the term “voting security,” as used 

in the market-based rate regulations, was intended to have the same meaning as the 

definition of “voting security” adapted from the PUHCA 1935 and set forth in PUHCA 

2005). 

46 To the extent that the investor has holdings in, and the public utility becomes 

affiliated with, a company that controls, for instance, sources of coal supplies and the 

transportation of coal supplies such as barges and rail cars, then the public utility must 

account for these inputs in its market power analysis. 18 CFR 35.37. 
Docket No. RM09-16-000 - 39 - 

agency rules.47 Therefore, the Commission is submitting the proposed modifications to 

its information collections to OMB for review and approval in accordance with section 

3507(d) of the Paperwork Reduction Act of 1995.48 

63. The “public protection” provisions of the Paperwork Reduction Act 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. 

64. The Commission is proposing amendments to the Commission’s regulations to 

provide for limited blanket authorizations under FPA section 203(a)(1) and FPA section 

203(a)(2). Although the Affirmation constitutes a new reporting requirement, it is offset 

by the reduction in applications under section 203 and related reporting requirements 

under section 205 under the market-based rate program. In lieu of a section 203 

application, the Affirmation would need to be filed with the Commission, reducing the 

filing burden. Moreover, the related filings under the market-based rate program under 

section 205, such as the notices of change in status, would also decrease. This would 

 47 5 CFR 1320. 

48 44 U.S.C. 3507(d). 
Docket No. RM09-16-000 - 40 - 

reduce the burden on the electric industry because it will reduce the number of filings that 

need to be made with the Commission. 

65. The Commission estimates there will be 10 initial filers each filing an average of 

1.2 Affirmations annually with an estimated time of response of 3.5 hours, for a total of 

42 hours. The Commission further estimates that there will be 40 annual updates to the 

initial filings with an estimated time of response of 1 hour each, for a total of 40 hours. 

Therefore the Affirmation would create a total reporting burden of 82 hours annually. 

Since the Affirmation is voluntary for holding companies that wish to avoid the filing a 

complete application of approval under section 203(a)(2) of the FPA, the Commission 

believes the preparation of the Affirmation will consume less time than preparation of an 

application for approval under section 203(a)(2). 

Title: FERC-519C, Applications Under Federal Power Act Section 203; FERC-516, 

Electric Rate Schedule Filings. 

Action: Proposed Collection 

OMB Control No.: To be determined by OMB following issuance of the final rule. 

Respondents: Businesses or other for-profit institutions. 

Frequency of Responses: Occasionally. 

Necessity of the Information: The Commission is proposing limited blanket 

authorizations under section 203(a)(1) and section 203(a)(2), providing for a category of 

jurisdictional transactions under section 203 for which the Commission would not require 

applications seeking prior approval. Under the proposed blanket authorization, the public 

utility whose securities are acquired would be exempt from the requirements of the 
Docket No. RM09-16-000 - 41 - 

market-based rate program and restrictions on affiliate transactions under Part 35. The 

information collected pursuant to this Affirmation will allow the Commission to monitor 

public utility holding companies that are granted an exemption of affiliate reporting 

requirements and to ensure that a holding company’s acquisitions and subsequent 

conduct are consistent with the public interest. Commission enforcement staff may 

periodically review and seek to verify the statements made in filed Affirmations. 

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. 

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

contacting the following: Federal Energy Regulatory Commission, 888 First Street, NE, 

Washington, DC 20426 [Attention: Michael Miller, Office of the Executive Director, 

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

67. For submitting comments concerning the collection(s) of information and the 

associated burden estimate(s), please send your comments to the contact listed above and 

to the Office of Information and Regulatory Affairs, Office of Information and 

Regulatory Affairs, Washington, DC 20503 [Attention: Desk Officer for the Federal 

Energy Regulatory Commission, phone (202) 395-7345, fax: (202) 395-7285, e-mail: 

oira_submission@omb.eop.gov]. 
Docket No. RM09-16-000 - 42 - 

V. Environmental Analysis

68. 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.49 The Commission has categorically excluded certain 

actions from this requirement as not having a significant effect on the human 

environment. The proposed regulations are categorically excluded as they address 

actions under section 20350 and section 205.51 Accordingly, no environmental 

assessment is necessary and none has been prepared in this NOPR. 

VI. Regulatory Flexibility Act Analysis

69. The Regulatory Flexibility Act of 1980 (RFA)52 generally requires a description 

and analysis of final rules that will have significant economic impact on a substantial 

number of small entities. The RFA mandates consideration of regulatory alternatives that 

accomplish the stated objectives of a proposed rule and that minimize any significant 

economic impact on a substantial number of small entities. Most filing companies 

regulated by the Commission do not fall within the RFA’s definition of small entity.53 

 49 Regulations Implementing the National Environmental Policy Act of 1969, 

Order No. 486, FERC Stats. & Regs., Regulations Preambles 1986-1990 ¶ 30,783 (1987). 

50 18 CFR 380.4(a)(16). 

51 18 CFR 380.4(a)(15). 

52 5 U.S.C. 601-12. 

53 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 

(continued...) 
Docket No. RM09-16-000 - 43 - 

Moreover, as noted above, this proposed rule provides for a blanket authorization under 

section 203 that would extend to an exemption from certain filing requirements under 

Part 35 of the Commission’s regulations. Thus, filing requirements are reduced by the 

rule. Therefore, the Commission certifies that the proposed rule will not have a 

significant economic impact on a substantial number of small entities. As a result, no 

regulatory flexibility analysis is required. 

VII. Comment Procedures

70. The Commission invites interested persons to submit comments on the matters and 

issues proposed in this notice to be adopted, including any related matters or alternative 

proposals that commenters may wish to discuss. Comments are due [Insert Date that is 

60 days after publication in the FEDERAL REGISTER]. Comments must refer to 

Docket No. RM09-16-000, and must include the commenters’ name, the organization 

they represent, if applicable, and their address in their comments. 

71. The Commission encourages comments to be filed electronically via the eFiling 

link on the Commission’s web site at http://www.ferc.gov. The Commission accepts 

most standard word processing formats. Documents created electronically using word 

processing software should be filed in native applications or print-to-PDF format and not 

in a scanned format. Commenters filing electronically do not need to make a paper 

filing. 

 

operation. 
Docket No. RM09-16-000 - 44 - 

72. Commenters that are not able to file comments electronically must send an 

original and 14 copies of their comments to: Federal Energy Regulatory Commission, 

Secretary of the Commission; 888 First Street, NE, Washington, DC 20426. 

73. All comments will be placed in the Commission’s public files and may be viewed, 

printed, or downloaded remotely as described in the Document Availability section 

below. Commenters on this proposal are not required to serve copies of their comments 

on other commenters. 

VIII. Document Availability

74. 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 the Commission’s Home Page 

(http://www.ferc.gov) and in the Commission’s Public Reference Room during normal 

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE, Room 2A, 

Washington, DC 20426. 

75. From the Commission’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 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. 

76. User assistance is available for eLibrary and the Commission’s web site during 

normal business hours from FERC Online Support at (202) 502-6652 (toll free at 1-866-

208-3676) or e-mail at ferconlinesupport@ferc.gov, or the Public Reference Room at 
Docket No. RM09-16-000 - 45 - 

(202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room at 

public.referenceroom@ferc.gov. 

List of Subjects in 18 CFR Part 33

Electric utilities, Reporting and recordkeeping requirements, Securities. 

List of Subjects in 18 CFR Part 35

Electric power rates, Electric utilities, Reporting and recordkeeping requirements. 

By direction of the Commission. Commissioner Norris voting present. 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 
Docket No. RM09-16-000 - 46 - 

In consideration of the foregoing, the Commission proposes to amend parts 33 and 35, 

Chapter I, Title 18, Code of Federal Regulations, 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. Section 33.1 is amended by revising paragraphs (c)(2), (c)(12), and (c)(17) to read 

as follows: 

§ 33.1 Applicability, definitions, and blanket authorizations.

(c) * * * 

(2) Any holding company in a holding company system that includes a 

transmitting utility or an electric utility is granted a blanket authorization under section 

203(a)(2) of the Federal Power Act to purchase, acquire, or take: 

(i) Any non-voting security (that does not convey sufficient veto rights over 

management actions so as to convey control) 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; or 

(ii) Any 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, 

(A) The holding company will own less than 10 percent of the outstanding voting 

securities of such company; or 
Docket No. RM09-16-000 - 47 - 

(B) The holding company will own 10 percent or more but less than 20 percent of 

the outstanding voting securities of such company, provided that such holding company 

has not acquired, and does not hold, such securities for the purpose of or with the effect 

of changing or influencing the control of the specified company, and has not acquired, 

and does not hold, such securities in connection with or as a participant in any transaction 

having that purpose or effect, and must within 10 days following such acquisition file 

with the Commission an Affirmation in Support of Exemption from Affiliation 

Requirements, Form 519-C, and provide a copy to such company. 

(I) The statement must be signed by a senior executive officer of the company 

filing the statement, and must be verified under oath. 

(II) A public utility whose voting securities are acquired, directly or indirectly, 

in a transaction described in paragraph (B) shall be exempt from the requirements of an 

“affiliate” in Part 35. 

(III) If a holding company that has filed with the Commission an Affirmation in 

Support of Exemption from Affiliation Requirements subsequently determines that it no 

longer wishes to be bound by the commitments set forth in the Affirmation in Support of 

Exemption from Affiliation Requirements, the holding company must either reduce its 

ownership interest to below 10 percent of the outstanding voting securities of the 

company that has issued such securities or file with the Commission an application under 

section 203 of the Federal Power Act to request authorization to retain such securities, 

provided that, during the pendency of any application, it shall continue to comply with all 
Docket No. RM09-16-000 - 48 - 

of the commitments made in the Affirmation in Support of Exemption from Affiliation 

Requirements; or 

(iii) Any security of a subsidiary company within the holding company system. 

* * * * * 

(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: 

 (i) Any holding company granted blanket authorizations in paragraph (c)(2)(ii) 

of this section if, after the transfer, the holding company and any of its associate or 

affiliate companies in aggregate will own: 

 (A) less than 10 percent of the outstanding voting securities of such public utility, 

or 

(B) 10 percent or more and less than 20 percent of the outstanding voting 

securities of such public utility, provided that the holding company has complied with all 

requirements of paragraph (c)(2)(ii)(B) of this section; or 

(ii) Any person other than a holding company if, after the transfer, the person 

and any of its associate or affiliate companies in aggregate will own: 

(A) less than 10 percent of the outstanding voting securities of the public utility 

and within 30 days after the end of the calendar quarter in which such transfer has 

occurred the public utility notifies the Commission in accordance with paragraph (c)(17) 

of this section, or 
Docket No. RM09-16-000 - 49 - 

(B) 10 percent or more but less than 20 percent of the outstanding voting securities 

of the public utility, provided that the person has filed Form 519-C and continues to abide 

by the commitments stated in the form. 

* * * * * 

(17) A public utility granted blanket authorization under paragraph (c)(12)(ii)(A) 

of this section to transfer its outstanding voting securities shall, within 30 days after the 

end of the calendar quarter in which such transfer has occurred, file with the Commission 

a report containing the following information: 

(i) The names of all parties to the transaction; 

(ii) Identification of the pre- and post-transaction voting security holdings (and 

percentage ownership) in the public utility held by the acquirer and its associate or 

affiliate companies; 

(iii) The date the transaction was consummated; 

(iv) Identification of any public utility or holding company affiliates of the parties 

to the transaction; and 

(v) A statement indicating that the proposed transaction will not result in, at the 

time of the transaction or in the future, cross-subsidization of a non-utility associate 

company or pledge or encumbrance of utility assets for the benefit of an associate 

company as required in §33.2(j)(1). 

* * * * * 
Docket No. RM09-16-000 - 50 - 

PART 35 – FILING OF RATE SCHEDULES AND TARIFFS.

3. The authority citation for part 35 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. 

4. In §35.36, paragraph (a)(9) is revised, and paragraph (a)(10) is added, to read as 

follows: 

§ 35.36 Generally. 

 (a) * * * 

 (9) Affiliate of a specified company means any person that controls, is 

controlled by, or is under common control with the specified company. 

(i) Owning, controlling or holding with power to vote, less than 10 percent of 

the outstanding voting securities of a specified company creates a rebuttable presumption 

of lack of control. 

(ii) The Commission may, after appropriate notice and opportunity for hearing, 

determine that any person is an affiliate of a specified company if it finds that the person 

exercises directly or indirectly (either alone or pursuant to an arrangement or 

understanding with one or more persons) such a degree of influence (through ownership 

of voting securities or otherwise) over the management or policies or operations of the 

specified company as to make it necessary or appropriate in the public interest that the 

person be treated as an affiliate. 

(10) Voting security means any security presently entitling the owner or holder 

thereof to vote in the direction or management of the affairs of a company. 
Docket No. RM09-16-000 - 51 - 

* * * * * 

6. In section 35.43, paragraph (a)(1) is revised and paragraph (a)(6) is added, to read 

as follows: 

§ 35.43 Generally.

(a) * * * 

(1) Affiliate of a specified company means any person that controls, is 

controlled by, or is under common control with the specified company. 

(i) Owning, controlling or holding with power to vote, less than 10 percent of 

the outstanding voting securities of a specified company creates a rebuttable presumption 

of lack of control. 

 (ii) The Commission may, after appropriate notice and opportunity for hearing, 

determine that any person is an affiliate of a specified company if it finds that the person 

exercises directly or indirectly (either alone or pursuant to an arrangement or 

understanding with one or more persons) such a degree of influence (through ownership 

of voting securities or otherwise) over the management or policies or operations of the 

specified company as to make it necessary or appropriate in the public interest that the 

person be treated as an affiliate. 

 * * * 

(6) Voting security means any security presently entitling the owner or holder 

thereof to vote in the direction or management of the affairs of a company. 

 

* * * * * 
Docket No. RM09-16-000 - 52 - 

Note: The following Appendix will not be published in the Code of Federal Regulations

APPENDIX A--FERC FORM No. 519-C

 Form No. 519-C Approved 

 OMB No. 1902-XXX 

 Expires xx/xx/20xx 

THIS FILING IS 

□ An Initial (Original) Submission 

OR 

□ Resubmission No. ______ 

FERC FORM No. 519-C: 

Affirmation in Support of Exemption from Affiliation Requirements 

The public reporting for this form is estimated to average 3.5 hours per response. 

Send comments regarding the burden estimate or any aspect of these collections of information, 

including suggestions for reducing the burden, to the Federal Energy Regulatory Commission, 

888 First Street NE, Washington DC 20426 (Attention Information Clearance Officer); and to the 

Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, 

DC 20503 (Attention: Desk Officer for the Federal Energy Regulatory Commission). No person 

shall be subject to any penalty if any collection of information does not display a valid control 

number (44 U.S.C. § 3512 (a)). 
Docket No. RM09-16-000 - 53 - 

FERC FORM NO. 519-C 

AFFIRMATION IN SUPPORT OF EXEMPTION FROM AFFILIATION REQUIREMENTS 

01 Name and location of reporting person: 

02 Name and location of public utility (issuer) in which reporting person has acquired 10 percent or more of the 

outstanding voting securities: 

03 Number of shares of the outstanding voting securities of company identified in 2 above that are owned, directly 

or indirectly, by reporting person and officers, directors, and investors of reporting person, and (if applicable) 

exchange(s) on which such shares are listed for trading: 

04 Percent of class represented by aggregate shares of voting securities of company identified in 2 above owned by 

reporting person: 

05 Name and location of any other public utility that is an “affiliate” (as defined in § 35.36(a)(9) of the 

Commission’s regulations) of the reporting person and percentage of the outstanding voting securities of any such 

public utility that are owned or controlled, or held with the power to vote, directly or indirectly, by the reporting 

person: 

06 Description and location of any “inputs to electric power production” (as defined in § 35.36(a)(4) of the 

Commission’s regulations) that are owned or controlled by the reporting person or by any “affiliate” of the 

reporting person: 

07 Any other approvals of or reviews by other regulatory bodies obtained or required to be obtained in connection 

with the acquisition that is the subject of this statement: 

CORPORATE OFFICER CERTIFICATION

By signing below, I certify that, after reasonable inquiry and to the best of my knowledge and belief, the securities 

referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing 

the control of the issuer of the securities and were not acquired and are not held in connection with or as a 

participant in any transaction having that purpose or effect and that the information set forth in this statement is 

true, complete, and correct. 

In addition, I certify: 

1. Neither the reporting person nor any of its employees, officers, or investors shall request or receive 

disclosure of non-public information, either directly or indirectly, concerning the business or affairs of the issuer; 

2. Neither the reporting person nor any of its employees, officers or investors shall seek or accept 

representation on the board of directors (or equivalent governing body) of the issuer or propose a director or slate 

of directors in opposition to the nominee or slate of nominees proposed by the management of the issuer; 

3. Neither the reporting person nor any of its employees, officers or investors shall solicit or participate in 

soliciting proxies with respect to any matter presented to the investors of the issuer or any of its subsidiaries; 
Docket No. RM09-16-000 - 2 - 

4. Neither the reporting person nor any of its employees, officers or investors shall have or seek to have any 

representative serve as an officer, agent or employee of the issuer; or 

5. Neither the reporting person nor any of its employees, officers or investors shall seek to influence, in any 

way, by voting shares of the voting securities of the issuer or otherwise, the management or conduct of the day-today operations of the issuer, including but not limited to decisions to: 

a. purchase or sell electric energy, ancillary services, or inputs to electric power production by the issuer; 

b. schedule power production at any jurisdictional facility owned by or under the control of the issuer; 

c. hire or fix compensation of executive officers or employees of the issuer; 

d. schedule maintenance or outages at any jurisdictional facility owned by or under the control of the issuer; 

e. determine or influence whether generation, transmission, distribution, or other physical assets of the 

public utility are made available or withheld from the marketplace. 

6. Within 45 days following the end of each calendar quarter during which this Affirmation in Support of 

Exemption from Affiliation Requirements shall remain in effect, the reporting person shall file, as an amendment 

to this Affirmation in Support of Exemption from Affiliation Requirements, information as of the last day of such 

calendar quarter on the number of shares of the outstanding voting securities of the issuer then held and the percent 

of the total number of outstanding voting securities of that class that such shares represent. 

17 Name of Certifying Official 

18 Title of Certifying Official 

19 Signature of Certifying Official 

20 Date Signed (Month, Day, Year) 

The statement must be signed by a senior executive officer (i.e. president or vice president, general partner, or 

managing member, as applicable) of the reporting person filing the statement. The name and any title of each 

person who signs the statement must be typed or printed beneath his signature. A copy of the signed statement 

must be provided to the issuer of the securities with respect to which this statement is filed. The statement must be 

verified under oath.