Updated December 19th, 2023 at 23:39 IST

Energy watchdog in US calls scrutinising top asset managers

Growing share of corporate stocks by passive investors irks US Federal Energy Regulatory Commission.

Reported by: Business Desk
FERC has underlined the need for scrutiny of top asset managers' ownership of power utilities. | Image:Unsplash

US Federal Energy Regulatory Commission's (FERC) member has underlined the need for scrutiny of top asset managers' ownership of power utilities. This comes in the wake of the oversight body kickstarting a review. People opposing the decision have expressed concern about the growing share of corporate stocks held by passive investors, although FERC in May extended an authorisation for big index funds to own utility shares. 

A notice of FERC, issued on its website, said it had "launched an inquiry into whether and how to revise its policy on financial investment company ownership of electric utilities."
Addressing a meeting in Washington DC, Commissioner Mark Christie said major power and water companies often operate as local monopolies, with public service obligations that can conflict with investor interests in areas like profits or environmental goals. Christie said the commission has to "apply strict scrutiny when a huge asset manager like Vanguard or State Street or BlackRock is buying a big chunk of either the (utility) company itself or its holding company." "It's great that we're looking at whether or not we need to change the rules of the road" for authorizing utility ownership, Christie said. Representatives for BlackRock, Vanguard and State Street Corp did not immediately comment. 


The FERC on Tuesday posted a "notice of inquiry" reviewing its policy for granting waivers to ownership limits. In remarks to journalists after the meeting FERC Chair Willie Phillips did not give a timetable for the review's completion or indicate his views. "It's time to revisit our authority regarding these financial institutions," he said.
James Danly,another Commissioner, said during the meeting that he would welcome comments about what types of utility control should receive scrutiny.
Even "soft control," or the influence of investment companies, could violate requirements utilities operate for ratepayers' benefit, said Danly, who will not be able to vote on the matter because his term is ending.

( With Reuters inputs) 


Published December 19th, 2023 at 23:39 IST

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