Dive Brief:

• Evergy, a utility company, and Bluescape Energy Partners, an investment firm, are affiliated companies, the Federal Energy Regulatory Commission ruled Thursday in a decision that could sharpen the agency’s power market oversight.

• Through its investment in Evergy, Bluescape received two seats of the 17 on the Kansas City, Missouri-based company’s board, with one seat being filled by the investment firm’s own executive chairman. Sharing board members triggered an affiliated status, even though Bluescape owns less than 10% of Evergy’s shares, the standard threshold for being deemed an affiliate by FERC, according to the decision.

• FERC’s ruling will help ensure the integrity of power markets and protect utility customers, according to Tyson Slocum, energy program director for Public Citizen, a consumer watchdog group involved in the case at FERC. Based on the decision, FERC will likely deem FirstEnergy to be affiliated with investment bank Blackstone and holding company Icahn Enterprises due to similar involvement in FirstEnergy’s board, Slocum said.

Dive Insight:

Under the new policy, when FERC assesses Evergy’s ability to use its market power to affect electricity prices, the agency will include Bluescape’s assets, such as power plants, in that analysis, according to FERC Chairman Richard Glick.

“It's very important that we have the insight to understand when parties are affiliated so we can do a better job of regulating entities and overseeing their activities,” Glick said Thursday during the agency’s monthly meeting.

FERC’s revised affiliate policy could come into play, for example, when the agency reviews applications from utilities and other participants in power markets to sell electricity at market-based rates. In those reviews, FERC assesses whether the applicant has the ability to use market power to affect electricity prices.

The expanded policy could also help prevent self-dealing between affiliates, with a utility’s captive customers bearing the costs, according to Glick.

In its decision, FERC rejected Public Citizen’s call to also deem Elliott Management Corp. an Evergy affiliate for having gained two seats on the utility company’s board.

The Elliott board members are different from Bluescape’s board members because they are unaffiliated with Elliott and aren’t paid by Elliott, FERC said, whereas Bluescape’s executive chairman was named to Evergy’s board, FERC noted.

“Board membership confers rights, privileges, and access to non-public information, including information on commercial strategy and operations,” FERC said. “Where an investor’s own officer or director, or other appointee accountable to the investor, is appointed to the board of a public utility or holding company that owns public utilities, the investor itself will have those rights, privileges, and access, and thus the authority to influence significant decisions involving the public utility or public utility holding company.”

FERC gave Evergy 30 days to update its market power analysis with Bluescape’s generation and transmission assets and inputs to electric power production.

The decision will likely affect FirstEnergy, which has given a Blackstone employee and two Icahn Enterprises employees seats on its board, according to Slocum.

FirstEnergy will likely have to conduct screens to assess its market power, with Blackstone’s power plants included in those screens, Slocum said.

Public Citizen in August urged FERC to deem Blackstone and Icahn Enterprises to be FirstEnergy affiliates.