FERC section 203 filings

Author: Keith Martin Publication | October 2017

FERC section 203 filings will no longer be required before closing most tax equity partnerships to finance US renewable energy projects.

The Federal Energy Regulatory Commission said in an order on October 4 that section 203 filings are not required in partnership flip transactions where the tax equity investor has a passive interest.

Transfers of equity interests that effect a change in control of a US power plant that is used to sell power in to the wholesale electricity market usually require FERC approval. FERC has up to 180 days to review the sale, but in practice waves the remaining notice period after 30 to 60 days if no interveners object to the transfer.

A group of banks that are frequent tax equity investors in wind and solar projects asked FERC for a declaratory order that no such filings are required in standard partnership flip tax equity transactions. In such a transaction, the tax equity investor is a passive partner. The sponsor makes day-to-day decisions about the business. A list of major decisions requires tax equity investor consent. The investor can remove the sponsor as managing member in limited circumstances, like fraud or gross negligence or a managing member bankruptcy.

Market practice to date has been to make section 203 filings.

The new order can be found at 61 FERC ¶61,010.


Contacts

Keith Martin

Keith Martin

Washington, DC