FERC Denies Application for Interlocking Position at Retail Supplier Parent, Downstream Investment

FERC has denied an application for an individual to hold interlocking positions at the parent of a retail supplier, and another retail supplier in which the parent has invested as a minority owner (Docket ID-5369).

Specifically, FERC denied the application of Mary Anne Brelinsky, Senior Vice President of EDF Trading North America, LLC (EDF Trading), to also hold the position of Manager on AP Holdings, LLC's Board of Managers.

EDF Trading North America is the parent of retail supplier EDF Industrial Power Services.

As first reported by EnergyChoiceMatters.com, EDF Trading North America also recently purchased a 25% interest in AP Holdings, LLC, which is the parent of the various AP Gas & Electric retail suppliers (see prior story).

Section 305(b) of the Federal Power Act provides that, "it shall be unlawful for any person to hold the position of officer or director of more than one public utility ... unless the holding of such positions shall have been authorized by order of the Commission, upon due showing in form and manner prescribed by the Commission, that neither public nor private interests will be adversely affected thereby."

The Commission's regulations authorize interlocks between two or more public utilities if the public utilities are part of the same public utility holding company system or, generally speaking, if the public utilities are affiliated, (that is, one owns, wholly or in part, the other) and the primary business of the "owned" public utility is to own or operate transmission or generating facilities to provide transmission service or electric power for sale to the "owner" public utility

"In this context, 'affiliated' would mean where one company owns, wholly or in part, the other and the primary business of the 'owned' public utility is to own or operate transmission service or electric power for sale to the 'owner' public utility," FERC stressed.

"[I]n support of her request for authorization to hold the position of Senior Vice President of EDF Trading and Manager of AP Holdings' Board of Managers, Ms. Brelinsky contends that (1) neither EDF Trading nor AP Holdings is a traditional public utility with a franchised service territory; (2) neither has captive customers; (3) neither owns or controls generation, transmission, or distribution facilities or inputs to electric power production; and (4) both are authorized by the Commission to make wholesale sales of electric energy at market-based rates," FERC noted.

"In setting forth these factors as reasons why her application should be granted, Ms. Brelinsky fails to identify any Commission precedent granting an application on this basis, and we are aware of no instance where the Commission has authorized such an interlock based on these factors. We are also not persuaded that such factors overcome the Commission's longstanding and well-documented concerns regarding interlocks among unaffiliated public utilities, particularly the concern that such interlocks could be detrimental to the arm's-length bargaining process, which would adversely affect competition and consumers. We note that this concern is especially salient here, where both companies are power marketers and/or have merchant generation operations with authorization to engage in the wholesale sale of electricity and related services at market-based rates, and thus would otherwise be expected to compete to serve customers, in bidding for services, or in attracting new customers. As such, we will also not grant Ms. Brelinsky's application for the reasons she sets forth in her application," FERC said.