USA Law and Practice Contributed by: David P. Flynn, Lindsey E. Haubenreich, Thomas F. Puchner and Dennis W. Elsenbeck, Phillips Lytle LLP
The largest vertically integrated public util- ity holding companies include Duke, Southern Company, NextEra, Entergy, Dominion and Xcel. The largest restructured public utility holding companies include PG&E, Exelon, Edison Inter- national, Consolidated Edison, First Energy, National Grid and Northeast Utilities. The largest retailers include AEP, NRG, Constel- lation, EFH, Exelon and ConEd. The largest public power systems, based on net generation, are the New York Power Authority, the Salt River Project and CPS Energy. 1.3 Foreign Investment Review Process While US utilities or utility holding companies may have foreign ownership, and the USA gen- erally maintains – in principle – an “open invest- ment” policy, that policy has been tempered by growing concerns about national security. The 1988 Exon-Florio Amendment to the Defense Protection Act of 1950 authorises the President of the USA, through the inter-agency Committee on Foreign Investment (CFIUS), to review and restrict foreign investments (particularly foreign states of concern) that may impact national security. The Foreign Investment and National Security Act of 2007 (FINSA) enhances the Exon-Florio Amendment by broadly defining the type of infrastructure transactions covered and adding more stringent rules pertaining to the review and investigation of foreign investments. In 2018, Congress enacted the Foreign Investment Risk Review Modernization Act (FIRRMA), which expands the scope of transactions covered under CFIUS’s jurisdiction. Currently, there is a growing level of concern at the federal level as to the role (and related control) of a number of
foreign-owned/controlled entities in this sector, suggesting further restrictions may be forthcom- ing. 1.4 Sale of Power Industry Assets The sale of generation, storage, transmission and distribution system assets as well as the merger of industry entities generally requires federal and state approval. At the federal level, FERC approval is required under Section 203 of the FPA for the sale, lease or disposition of: • facilities valued at over USD10 million under FERC’s jurisdiction that are used for the transmission or sale of electrical energy in interstate commerce; and • generation assets making wholesale sales. FERC approval is also required to effectuate mergers, acquisitions, or change in control of jurisdictional facilities. In examining such trans- actions, FERC reviews the effect on competition, rates and cross-subsidisation and whether the transaction is consistent with the public interest. Additional requirements may apply to trans- actions involving nuclear generation facilities, where approval from the US Nuclear Regula- tory Commission (NRC) is required to effectuate an asset transfer. At the state level, state util- ity commissions are often required to approve acquisition or divestiture of power assets. 1.5 Central Planning Authorities The USA does not have a central planning authority that oversees and administers the elec- tricity supply and development of transmission and distribution facilities. The USA is broadly divided into three electricity grids – the Eastern Interconnection, the Western Interconnection and the Electric Reliability Council of Texas. Across those three grids are seven competitive
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