FERC Proposes Policy Clarifying Hold Harmless Commitments

On January 22, 2015, FERC issued a proposed policy statement to clarify FERC's policy regarding the use of hold harmless commitments in Federal Power Act section 203 applications.  Under the proposed policy statement, applicants will still be required to demonstrate that the proposed transaction does not have an adverse effect on rates, but FERC will define with greater specificity what costs will be considered transaction-related costs and how hold harmless commitments will apply.

Specifically, FERC intends to provide the following clarifications:

• Duration – FERC proposes to no longer  accept hold harmless commitments that are limited in duration;
• Scope – FERC provided a lengthy list of costs that should be subject to hold harmless commitments in both merger and non-merger settings;