posted on Wednesday, October 11, 2006 2:34 PM by Andrea Kells

FERC Approves ITC Acquisition of Michigan Transco

For the first time, FERC has granted approval of one independent transmission company's purchase of another; it authorized ITC Holdings, the parent of ITCTransmission, to acquire Michigan Transco Holdings, the parent of Michigan Electric Transmission.  As a result, ITC will become the largest Transco in the U.S. and one of the ten largest transmission providers in the nation, with more than 20,000 MW of peak load and almost 20 percent of the peak load of the Midwest ISO.   

The same order, the first issued under FERC's new EPAct 2005 merger authority, also authorized an intra-corporate reorganization of Michigan Electric and Trans-Elect NTD Path 15 that will occur before the ITC acquisition.   

FERC's only concern with the proposed acquisition was the lack of a comprehensive hold-harmless agreement to protect ratepayers from increased rates resulting from the transaction.  While ITC stated that it would not seek to recover a transaction premium from ratepayers, and that transmission rates would remain formula rates under the Midwest ISO tariff, FERC worried that inputs to the formula rates could change due to the acquisition and adversely affect transmission rates.  To mitigate that possibility, FERC conditioned its authorization on ITC providing a hold-harmless provision requiring ITC to seek specific FERC approval before recovering merger-related costs in transmission rates.  ITC agreed.