On October 4, FERC issued an order granting a petition for declaratory order by a group of tax equity investors in renewable energy projects, which requested FERC confirmation that the tax equity interests identified in FERC’s order in AES Creative Resources do not constitute voting securities for purposes of section 203 of the Federal Power Act (“FPA”). In the order, FERC found that the tax equity interests in public utilities or public utility holding companies identified in AES Creative Resources do not constitute voting securities for purposes of FPA section 203, which extended FERC’s same finding with respect to FPA section 205 in AES Creative Resources. Thus, FERC confirmed that, because such interests do not constitute voting securities for purposes of FPA section 203, the issuance or transfer of such interests does not constitute a transfer of control with respect to the public utility and does not require advance authorization from FERC pursuant to FPA section 203(a)(1). In addition, FERC confirmed that, since the interests identified in AES Creative Resources do not constitute voting securities for purposes of FPA section 203, the acquisition of such interests by a holding company qualifies for the blanket authorization set forth in section 33.1(c)(2)(i) of FERC’s regulations.
Nonetheless, FERC’s order still presents some modicum of risk for determining whether FERC approval is needed for transactions involving tax equity interests. In a footnote, FERC noted that its order is limited to the securities addressed in AES Creative Resources, as requested in the petition for declaratory order. To the extent a future tax equity investor is considering whether securities with characteristics that vary from those presented in AES Creative Resources constitute non-voting securities, it remains the investor’s responsibility to make a determination as to whether prior FERC approval is necessary for transactions involving such securities.