y order that the Commission concur in certain interpretations of
section 203(a)(2) of the Federal Power Act (FPA).
2
It also granted blanket authorization
under section 203(a)(2) for Goldman and for certain Goldman subsidiaries to acquire
certain securities, subject to specified conditions and limitations, including a quarterly
reporting requirement. Goldman asks the Commission to remove the quarterly reporting
requirement and grant an additional authorization to acquire the securities of industrial
self-generators.

2.

For the reasons discussed below, the Commission denies the requested
modification of the quarterly reporting requirement. We dismiss the request for blanket
authorization to acquire securities of industrial self-generators; Goldmans request is
already granted by a blanket authorization in Order No. 669-A.
3





1
The Goldman Sachs Group, Inc., 114 FERC ¶ 61,118 (2006) (Declaratory
Order).

2
16 U.S.C. § 824b (2000), as amended by Energy Policy Act of 2005, Pub. L.
No. 109-58, 119 Stat. 594 (2005)(EPAct 2005).

3
Transactions Subject to FPA Section 203, Order No. 669, 71 Fed. Reg. 1,348
(Jan. 6, 2006), FERC Stats. & Regs. ¶ 31,200 (2005), order on rehg, Order No. 669-A,
71 Fed. Reg. 28,422 (May 16, 2006).
Docket Nos. EL06-27-001 and EC06-38-001

- 2 -
Background

3.

Goldman is an investment banking, securities, and investment management firm
providing a range of financial services to corporations, financial institutions,
governments, and high-net-worth individuals. Goldman indirectly owns several
subsidiaries that engage in the generation and sale of electricity; accordingly, for
purposes of section 203(a)(2), Goldman is a holding company. It also owns certain
Nonutility Subsidiaries
4
that regularly acquire utility securities in their capacities as
broker-dealers and underwriters, as fiduciaries in connection with asset management
operations, and for hedging purposes.

4.

Section 203(a)(2) requires prior Commission authorization for holding companies
to acquire securities with values in excess of $10 million of transmitting utilities, electric
utility companies or holding companies containing such entities. On December 12, 2005,
Goldman filed an application under section 203(a)(2) for blanket authorization for
Goldman and its Nonutility Subsidiaries to acquire securities, in the ordinary course of
business, of any electric utility company, any transmitting utility, or any holding
company in any holding company system that includes a transmitting utility or electric
utility company, subject to substantially the same limitations, exclusions, and conditions
that the Commission approved in the UBS AG and Bank of America, N.A decisions (Bank
of America),
5
provided that Goldman and the Nonutility Subsidiaries do not obtain
control of the operation or management of the issuer.
6
Of particular relevance here is the
quarterly reporting requirement proposed by Goldman. The requirement is that it report
for itself and its affiliates, by electric utility company, transmitting utility or holding

4
Goldman identified as Nonutility Subsidiaries Goldman Sachs & Co., a
broker-dealer registered with the Securities and Exchange Commission (SEC), Goldman
Sachs Asset Management Co., and various unnamed subsidiaries identified as
proprietary trading and merchant banking subsidiaries.

5
UBS AG and Bank of America, N.A., 101 FERC ¶ 61,312 ( 2002), rehg granted
in part and denied in part, 103 FERC ¶ 61,284 ( 2003), rehg granted, 105 FERC
¶ 61,078 ( 2003).

6
Goldman requested an exception to the Bank of America conditions. Whereas
Bank of America limited the approval to acquire and own, as principal, up to five percent
of each class of voting securities, Goldman requested approval to acquire and own up to
ten percent of each class of voting securities (10 percent limit). In addition, Goldman
requested that the 10 percent limit not apply to voting securities acquired by Goldman
and the Nonutility Subsidiaries in their fiduciary capacities, as dealer/traders, in
connection with underwritings, or for hedging, subject to certain conditions. These
requests were granted.
Docket Nos. EL06-27-001 and EC06-38-001

- 3 -
company, within 45 days after the close of each calendar quarter, (i) holdings of voting
securities acquired under the requested authorization and held as principal, and (ii) total
holdings of voting securities irrespective of the capacity in which such securities are held.
The reports would be subject to a de minimis threshold of 1 percent. The Declaratory
Order temporarily granted the requested blanket authority, with the proposed quarterly
reporting requirement and other conditions.

Request for Rehearing

5.

In its rehearing request, Goldman requests two modifications to the Declaratory
Order: (1) that the quarterly reporting requirement be replaced by a requirement that
Goldman provide the Commission copies of the relevant filings made with the SEC under
the Securities Exchange Act of 1934, in the same manner as contemplated by new
§ 18 C.F.R. 33.1(c)(4);
7
and (2) that the Commission grant blanket authorization under
§ 203(a)(2) to Goldman and the Nonutility Subsidiaries to acquire, without limitation,
securities of any company owning generating facilities of 100 megawatts (MW) or less in
size that are used fundamentally for its own load or for sales to affiliated end-users
(industrial self-generators).

6.

Regarding the reporting requirement, Goldman points out that in Paragraph 145
and footnote 107 of Order No. 669, the Commission refers to SEC Schedules 13D and
13G and Form 13F, which are reports of beneficial ownership of equity securities. Order
No. 669 indicates that, because the same information already must be filed with the SEC,
the reporting requirement under the rule would create a de minimis burden on companies
subject to section 203(a)(2). Goldman further states that the quarterly reporting
requirement imposed under the Declaratory Order is intended to provide the Commission
with information on securities transactions that will enable it to monitor potential changes
in control over public utilities, which is the ultimate concern underlying section 203.
Accordingly, for consistency with Order No. 669, and because the SEC filings will
provide the Commission with information needed to monitor potential changes in control,
Goldman requests that the Commission modify the Declaratory Order to specify that, in

7
Goldman and other parties requested on rehearing of Order No. 669 that the
Commission clarify the text of new § 33.1(c)(4) to be consistent with the Commissions
expressed intent in Paragraph 145 of Order No. 669. Effective June 15, 2006,
§ 33.1(c)(4) will state [a] holding company granted blanket authorizations in
paragraph (c)(2) of this section shall provide the Commission copies of any
Schedule 13D, Schedule 13G and Form 13F, at the same time and on the same basis, as
filed with the Securities and Exchange Commission in connection with any securities
purchased, acquired or taken pursuant to this section. Order No. 669-A at P 142.
Docket Nos. EL06-27-001 and EC06-38-001

- 4 -
lieu of the quarterly filing, Goldman must provide the Commission with copies of all
SEC filings in connection with an acquisition in the same manner specified under new
§ 33.1(c)(4).

7.

Regarding the requested blanket authorization for acquisition of securities of
industrial self-generators, Goldman notes that the Commission granted such authorization
in a recent order issued to Morgan Stanley.
8
Goldman states that industrial self-
generators that sell surplus power at wholesale to the local interconnected utility are
public utilities under section 203(a)(2). Goldman and the Nonutility Subsidiaries,
without separate Commission authorization under section 203(a)(2), are limited to
acquiring up to 10 percent of the voting securities of a public utility, whether it is an
industrial self-generator or a large, traditional electric utility company with captive
customers. Goldman argues that the acquisition of securities of an industrial self-
generator does not raise the same concerns as utility combinations or changes in control
over traditional utilities, particularly under the proposed 100 MW size limit on generation
by the industrial self-generator.

8.

Goldman also argues that the grant of blanket authority to acquire securities of
industrial self-generators would be consistent with the Commissions rule under the
Public Utility Holding Company Act of 2005, which waives the accounting, record-
retention, and filing requirements in 18 C.F.R. Part 366 for holding companies that own
industrial self-generating facilities.
9
Goldman states that the Commission notes in that
rule that the grant of a waiver to such entities would eliminate what might otherwise be a
barrier to the development of additional electric generation.
10


Discussion

Goldmans Request to Modify Reporting Requirements.

9.

Goldman asserts that the reporting requirement imposed by the Declaratory
Order should be modified to conform to the reporting requirement in Order No. 669 at