FERC Proposes Policy Statement on Hold Harmless Commitments

The Federal Energy Regulatory Commission ("FERC") issued a proposed policy statement to clarify several aspects of hold harmless commitments offered by applicants.

The policy statement is intended to mitigate adverse rate impacts from certain transactions under Section 203 of the Federal Power Act ("FPA"). The proposed policy statement would clarify the scope, definition, and types of controls and procedures of hold harmless commitments and the costs that should be subject to them.

Specifically, the statement would require applications offering hold harmless commitments to implement controls and procedures to track the costs from which customers would be held harmless. Additionally, FERC proposed that hold harmless commitments that are limited in duration should be accepted no longer, and that, under certain circumstances, applicants may be required to demonstrate that transactions will not have an adverse effect on rates even if such transactions avoid relying on hold harmless commitments or ratepayer protection mechanisms.

See: Proposed Policy Statement; Press Release.