On September 6, 2024, the Federal Energy Regulatory Commission (FERC or Commission) issued an order finding that the presence of a non-independent director, i.e., one who is affiliated with an investor, on the board of directors of a public utility or its upstream holding company creates an affiliation between the sponsor and the investor, regardless of who appointed the non-independent director. Castleton Commodities Merchant Trading L.P., 188 FERC ¶ 61,157 (2024).  This order expands upon the Commission’s previous orders issued in Evergy Kansas Central, Inc., 181 FERC ¶ 61,044 (2022), order on reh’g, 184 FERC ¶ 61,003 (2023), and is important for purposes of educating sponsors and investors alike about how to structure transactions in ways to avoid creating affiliations where investors and sponsors would prefer they not exist.

To understand the broader implications of this decision and how it could affect your future transactions, read the full update.