FERC Approves BlackRock's 20% Utility Holdings, Citing Capital Needs

In a significant move, the U.S. Federal Energy Regulatory Commission (FERC) has approved BlackRock's request to retain substantial holdings in American utility companies. This decision comes as a victory for the global asset management giant, which has faced concerns over its extensive influence and potential political implications.

The approval, which includes the agreement of FERC's Republican chairman, Mark Christie, acknowledges the necessity for utilities to secure capital. Christie, while expressing concerns about BlackRock's market power, emphasized the need for utilities to attract investment from various sources, including large asset management firms. He noted that a significant portion of the capital required by regulated utilities is either owned by or managed by these firms.

Technically, FERC's decision extends BlackRock's permission to hold up to 20% of voting securities in any publicly traded U.S. utility company, surpassing the traditional 10% threshold. Additionally, any single fund managed by BlackRock is limited to holding no more than 10% of the voting securities in a utility company. This decision is valid for three years.

BlackRock, managing approximately $11.5 trillion in assets, expressed gratitude for FERC's decision. The firm stated its commitment to continuing to provide billions of dollars in funding to the U.S. energy sector, especially during a time when the affordability and reliability of energy are crucial.

BlackRock's application faced opposition from various political factions. Republican state officials and conservative-leaning non-profit organizations, such as the Consumer Research Institute, argued that BlackRock's past involvement with investor climate groups may have violated its commitment to being a passive investor. The executive director of the non-profit organization, Will Hilde, expressed disappointment with FERC's decision, suggesting that the commission's members should be removed if they fail to enforce the law and adhere to their agreements with asset management companies.

Tyson Slocum, the director of the energy program at Public Citizen, a public interest group, commented that FERC's decision was driven by political and investment considerations. He noted that while the commission had reservations, BlackRock's size and influence made it a formidable entity that could not be easily challenged.