FERC OKS application to buy NRG voting shares
The Federal Energy Regulatory Commission approved an application by activist investor Elliott Investment Management to purchase up to 20% of NRG Energy’s voting shares.
As of July 19, 2023, Elliott owned a 2.36% stake in NRG’S voting shares, which give shareholders voting rights to elect the members of the board, according to FERC’S order issued Monday authorizing Elliott’s application. Combined with Elliott’s nonvoting economic interests in NRG through its ownership of derivative instruments, the investor has an approximately 13.14% stake in NRG as of July, according to the order.
NRG replaced its CEO in November and added four members to the board under pressure from Elliott, which had criticized Nrg’ s acquisition of vi v int smart Home, a home security and alarm systems company.
A representative for Elliott declined to comment. NRG did not reply to multiple requests for comment.
The Federal Power Act gives FERC the authority to regulate all electric utility companies engaged in business across state lines. Section 203 of the FPA requires holding companies that want to acquire more than $10 million in securities of an electric utility to seek FERC authorization. Houston-based NRG has operations in Maryland, Delaware, Illinois and California.
In his concurrence with FERC’S order, Mark Christie, the sole Republican on the three-person commission, wrote that Elliott’s application is consistent with FERC’S policy and precedent. However, he said FERC’S order should not suggest that it isn’t interested in comments about Elliott’s investment practices from Public Citizen, a consumer advocacy nonprofit.
In an interview, Tyson Slocum, director of Public Citizen’s energy program, said the group’s goal is to ensure utilities operate in the public interest rather than at the speculative whims of a hedge fund.
“Elliott Management seeks to create upheaval and to change the stock price with short-term, almost-gimmicky initiatives,” Slocum said. “Our goal is to stop activist investors from targeting public utilities.”
Elliott has gone after three Houston companies in the last few months, including NRG, telecommunications infrastructure company Crown Castle and Phillips 66. The activist investor also recently targeted Dallas-based Match Group, owner of dating apps Tinder and Hinge, and Dallas-based AT&T.