WASHINGTON, D.C. — The Federal Energy Regulatory Commission (FERC) today issued a unanimous ruling against hedge fund Bluescape Energy Partners, finding that any investor that obtains less than 10% of a utility, but gets control over a board seat occupied by its employee, is now automatically deemed to be an affiliate.
Public Citizen and the Communications Workers of America had previously filed a joint protest regarding Evergy’s affiliation with the hedge funds Elliott Management and Bluescape Energy Partners.
Tyson Slocum, director of Public Citizen’s Energy Program, issued the following statement:
“Today’s FERC decision is a win for consumers, market integrity, and protection from corporate raiders. Prior to today’s landmark ruling, a typical tactic of activist hedge funds and private equity firms was to acquire an investment stake of less than 10% in order to evade regulatory oversight, and then bully the target utility into giving up control over its board of directors. This is what Carl Icahn excels at. FERC’s order today nullifies such strategies used by hostile investors by deeming corporate raiders to be affiliated with the target public utility if their strategy includes control over a board.
“Today’s precedent-setting order also restores market integrity by requiring an entity that owns less than 10% of a utility’s voting shares but controls a seat on the board to include all of its power plants along with the utility’s when FERC calculates whether a utility has market power. This action will make sure that investors that control a public utility cannot engage in anti-competitive practices.
“For utilities with captive ratepayers, all affiliates can only engage in financial transactions with the utility at arm’s length. This prevents an investor from selling services at inflated costs, and then having the utility recover those inflated costs from ratepayers. Today’s order ensures that banks, hedge funds and private equity funds that seek to control a utility’s board cannot engage in such abusive practices.”