Troutman Sanders LLP--On October 15, 2015, the Commission granted a June 30, 2015 petition for declaratory order filed by Bloom Energy Corporation (“Bloom”)—a maker of fuel cells—seeking confirmation that its current and future subsidiaries engaged in generating and selling electricity at negotiated rates to non-captive customers continue to be exempt from certain Commission regulations under the Public Utility Holding Company Act of 2005 (“PUHCA 2005”).
In its June 30, 2015 petition, Bloom stated that it develops, builds, and installs solid-oxide fuel cells that generate electric energy. Bloom further stated that it, in some instances, sells its fuel cells to indirect subsidiaries, which, in turn, use the fuel cells to provide energy services to third-party industrial and commercial customers. Bloom identified these indirect subsidiaries as “public utility companies” under PUHCA 2005—a designation that would, by extension, make Bloom and certain of its intermediate subsidiaries “holding companies” subject to Commission jurisdiction under PUHCA 2005.
On September 18, 2014, the Commission granted a previous Bloom petition for declaratory order, finding that Bloom and certain of its subsidiaries not otherwise exempt from PUCHA 2005 met the requirements of “non-traditional utilities,” and, thus, pursuant to the Commission’s regulations, qualified for an entity-specific exemption from PUCHA 2005 requirements.
In its June 30, 2015 petition, Bloom reported two changes in the facts that had occurred since the issuance of the September 18, 2014 order: (i) two of Bloom’s public utility company subsidiaries had been granted market-based rate authorization; and (ii) a subsidiary of Exelon Corporation called Exelon Generating Company, LLC (“ExGen”) had acquired 100 percent of the indirect, non-managing Class A interests in two Bloom subsidiaries. Bloom sought confirmation, through its June 30, 2015 petition, that these changes did not affect the “non-traditional utility” status of the subsidiaries in question.
In its October 15, 2015 order, the Commission noted that, under its regulations, “non-traditional utilities” are: (i) Commission-jurisdictional utilities that have no captive customers and that are not affiliated with any jurisdictional utility that has captive customers, and that do not own Commission-jurisdictional transmission facilities or provide Commission-jurisdictional transmission services and that are not affiliated with persons that own Commission-jurisdictional transmission facilities or provide Commission-jurisdictional transmission services; and (ii) holding companies that own or control only such utilities.
With respect to the first change identified by Bloom—that two of its subsidiaries had been granted market-based rate authority—the Commission found that neither these subsidiaries, nor their affiliates, had acquired transmission facilities or provided transmission services, and did not have captive customers, and therefore continued to meet the definition of “non-traditional utilities.”
With respect to the second change identified by Bloom—ExGen’s acquisition of certain member interests in Bloom subsidiaries—the Commission found that while, according to Bloom, neither ExGen nor ExGen’s utility affiliates had any captive customers, certain of ExGen’s utility affiliates did own transmission facilities subject to the Commission’s jurisdiction. According to the Commission, Bloom was thus required to demonstrate that ExGen is not an affiliate of the Bloom subsidiaries in which ExGen had acquired member interests, if those Bloom subsidiaries were to continue to qualify as “non-traditional utilities.” The Commission noted that, under PUHCA 2005, an “affiliate” of a company refers to any company, 5 percent or more of the outstanding voting securities of which are owned, controlled, or held with power to vote, directly or indirectly, by such company. The Commission determined that, while the interests that ExGen had acquired granted ExGen certain rights, they did not confer “control” over Bloom’s subsidiaries, or allow ExGen to participate in the subsidiaries’ day-to-day operations, and did not otherwise constitute “voting securities.” Therefore, the Commission found that the Bloom subsidiaries in question continued to meet the definition of “non-traditional utility,” and, by extension, continued to be exempt from the requirements of PUCHA 2005.
A copy of the Commission’s order may be found here.