FERC Issues Policy Statement On Hold Harmless Commitments Offered By FPA Section 203 Applicants

On May 19, 2016, the Federal Energy Regulatory Commission ("FERC") issued a policy statement regarding future implementation of hold harmless commitments offered by applicants as ratepayer protection mechanisms to mitigate adverse effects on rates that may result from transactions subject to section 203 of the Federal Power Act ("FPA"). The policy statement provides guidance in four areas related to hold harmless commitments: (1) the scope and definition of the costs that should be subject to hold harmless commitments; (2) controls and procedures to track the costs from which customers will be held harmless; (3) FERC's continued acceptance of hold harmless commitments that are limited in duration; and (4) clarification that applicants may offer another form of ratepayer protection mechanism in the place of a hold harmless commitment, and that an applicant may not require any such mechanism in order to be able to demonstrate that a proposed transaction will not have an