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FERC Approves Nstar-NU Merger
July 7, 2011
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FERC has approved the merger application of Nstar and Northeast Utilities, finding that the merger will have no adverse effect on competition as a result of either horizontal or vertical market power (EC11-35).
Additionally, the Commission found that the merger raises no monopsony power concerns, after agreeing with the applicants that the relevant wholesale energy product market definition in the case is power purchased to serve all load in ISO New England, and not just the POLR load served by regulated utilities. Protestors, such as generators, had argued for the latter definition, which resulted in a higher market concentration due to the smaller relevant market.
However, to limit the relevant market to only POLR load, "would be to assume that competitive retail suppliers do not compete with Applicants in making wholesale purchases to supply retail electricity to customers, and that power purchases for non-POLR purposes (i.e., purchases by competitive suppliers) are not interchangeable with, or a substitute for, power that is purchased to meet POLR obligations. Protestors provide no basis for such an assumption. To agree with protestors one would also have to assume that the only retail competition in ISO-NE is between regulated utilities competing to supply POLR load. This is not the case," FERC said.
As for allegations of buyer-side market power in the Forward Capacity Market resulting form the merger, FERC said such concerns have been addressed in its recent order on buyer-side market power in FCM.
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