Congressional witnesses advocate PUHCA repeal

By the OGJ Online Staff

HOUSTON, Feb. 7, 2002 — A controversial 1930s era law that governs public utility holding companies should be repealed witnesses testified in hearings before the US Senate Committee on Energy and Natural Resources.

Repeal of the Public Utility Holding Company Act (PUHCA) is included in a comprehensive energy bill (S 1766) sponsored by Senators Jeff Bingaman (D-NM), committee chairman, and Tom Daschle (D-SD). The measure would substitute oversight by state regulators for PUHCA. Witnesses said the key will be to ensure regulators have access to books and records to prevent cross subsidies.

Investor-owned utilities have targeted the law for repeal, but municipally owned power companies and electric cooperatives have urged Congress to go slow, unless consumer safeguards are included.

Isaac C. Hunt, a commissioner with the US Securities and Exchange Commission, said the SEC still takes the position that PUHCA is outdated and more authority should be given to the Federal Energy Regulatory Commission and state regulators. The SEC has come under fire from US House Democrats for advocating repeal of PUHCA.

Last week Representatives John Dingell (D-Mich.), ranking member of the House Energy and Commerce Committee, and member Edward Markey (D-Mass.) asked the agency to reconsider its position in light of Enron’s activities and pending results of investigations under way by the SEC.

Dingell and Markey speculated grid reliability could have been compromised if the Houston company had been able to “gain control of critical transmission facilities.” They suggested PUHCA limits on the ability of nonutility companies to diversify into the utility business discouraged Enron because it would have been required to register under PUHCA and divest its nonutility holdings.

But Hunt insisted FERC should be given the lead oversight role and “we should be out of this business.” To avoid cross subsidies by a utility of its sister companies, he said, FERC and state regulators should have complete access to books and records.

Roy Hemmingway, chairman of the Oregon Public Utility Commission, said a company’s structure isn’t as important as access to information. Consolidation in the industry will make regulation more complex, he said, but “if we have access we can regulate,” he said. Other witnesses noted Enron’s ownership didn’t harm Oregon’s Portland General Electric Co.

“Enron was a red herring,” said David Sokol, CEO of MidAmerican Energy Holdings Co., Des Moines, Iowa. He said the fallen Houston energy company shouldn’t be allowed to stand in the way of modernizing the industry.

FERC general counsel Cynthia A. Marlette testified the agency believes PUHCA actually encourages market concentration because it requires a US utility’s operations to be interconnected and located in a single area. PUHCA “impedes our ability to monitor market power and prevent cross subsidy,” she said.


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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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