Merger Denied: Now What?

Since the modern electricity merger trend started in the mid-1980s, state commissions have approved nearly 100 electric utility acquisitions. I have addressed this trend with a series of essays—sketches for a book I will complete in 2017. The first essay ("Utility Mergers:  Who Has a Vision?") introduced the problem. Mergers of monopolies are not disciplined by competitive market forces, while regulatory policies fail to align merging companies' interests with the public interest. When no state has a clear vision for its corporate structure future, we get results that no one intended. Consolidation among investor-owned utilities has reduced their number by half, while leaving many of our local utilities owned by conglomerates. Electric utilities are no longer your grandparents' nest eggs.

Over this 30-year period, state commissions have rejected mergers only three times:  Southern California Edison and San Diego Gas & Electric (California 1991); Unisource (the holding company of Tucson Electric) and Kohlberg, Kravis Roberts (Arizona 2005); and Northwestern Utilities and Babcock and Brown Infrastructure (Montana 2007).  Now we have a fourth:  the Hawai'i Commission's rejection, in July 2016, of the acquisition of the Hawai'i Electric Company system by Nextera (the holding company of Florida Power & Light).1  (Full disclosure:  I was a witness in the case for the State of Hawai'i.)

The Hawai'i order contained an Appendix A, entitled "Commission Guidance for Any Future Merger or Acquisition Proceedings."  This addition is unusual and praiseworthy.  Most state commissions merely say "no," giving no guidance for the future. . . .


Testimony, Papers, and Presentations

Testimony addresses the issues of whether the proposed transaction affects the interests of ratepayers; the ability of JCP&L and MAIT to provide safe, adequate, and proper utility service at just and reasonable rates; and whether the proposed transaction is in the public interest.
This expert report was submitted to a federal trial court in May 2016 on behalf of City of Jacksonville, Florida. The litigation, and report, involve a 1943 disaffiliation of a gas corporation from its holding company, as mandated by the Public Utility Holding Company Act of 1935. The report explains why the disaffiliation did not prevent liability for the costs of environmental cleanup, if such liability exists under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, from passing to the new corporation.

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Hempling Appearances

Energy Bar Association
Panel on Practice Principles for New Regulatory Lawyers

UDC Law School Panel
Is the Exelon Takeover of Pepco in the Public Interest?

Nigeria Electricity Regulatory Commission
3rd Judges’ Seminar

Telecom Forum
Asamblea Plenaria REGULATEL

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Electricity Jurisdiction

Letter to Governors and Legislators


I highly recommend Scott Hempling. I have known him since 2003, since he was a consultant for the Hawaii Public Utilities Commission on various important and cutting-edge policy regulatory matters in Hawaii, through his time as the Executive Director at the National Regulatory Research Institute. His expertise, knowledge, and experience in all regulatory and energy matters is unmatched, and he would be a highly valuable resource and asset in any such endeavor.
— Carlito P. Caliboso, former Chairman, Hawaii Public Utilities Commission