FERC Loosens The Reins On Tax Equity Under Section 203 Of The Federal Power Act

On October 4, 2017, the Federal Energy Regulatory Commission (FERC) continued to clear its case backlog and issued a declaratory order that draws a road map clarifying that certain tax equity investments in FERC-regulated public utilities will not require prior FERC authorization under Section 203 of the Federal Power Act (FPA). FERC created the road map in 2009 in its AES Creative Resources order by reviewing the characteristics of certain tax equity interests—specifically, their rights and authority to manage and control the day-to-day operations of the public utility—and ruling that such interests did not constitute “voting securities” for purposes of FERC’s market-based rate regulations under Section 205 of the FPA. In granting the petition for declaratory order filed by the Ad Hoc Renewable Energy Financing Group, FERC determined that such interests are also not “voting securities” for purposes of FERC’s regulation of mergers and acquisitions under FPA Section 203.

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