[Congressional Record Volume 145, Number 92 (Friday, June 25, 1999)]
[Extensions of Remarks]
[Pages E1408-E1409]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     INTRODUCTION OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1999

                                 ______
                                 

                        HON. W.J. (BILLY) TAUZIN

                              of louisiana

                    in the house of representatives

                         Friday, June 25, 1999

  Mr. TAUZIN. Mr. Speaker, I am pleased to introduce a bill today to 
help America's energy consumers by repealing an outdated law that is 
keeping the best of the new technologies and innovative services from 
reaching our marketplace. I am pleased to be joined by twenty-one of my 
colleagues in introducing this important legislation. Our bill, which 
is almost identical to legislation passed out of the Senate Banking 
Committee, would repeal a New Deal Law, the Public Utility Holding 
Company Act of 1935 (PUHCA).
  Our legislation is a bipartisan initiative. The current Democratic 
and previous Republican Administrations have called for repeal of 
PUHCA. This legislation would implement the recommendations of the 
Securities and Exchange Commission (SEC) made in 1995 following an 
extensive study by the SEC of the effects of this outdated law on 
today's energy markets.
  PUHCA is a law that has outlived its usefulness. It imposes 
unnecessary costs on consumers and directly undermines the intent of 
recently enacted federal and state policies designed to bring more 
competition to America's energy market.
  PUHCA was enacted in 1935 to address abuses arising out of pyramid 
corporate structures at a time when electric utility regulation was 
just starting at both federal and state level. PUHCA's primary purpose 
was to dismantle more than 100 complex utility holding company 
structures that, in many cases, took advantage of weak federal and 
state regulations to pursue inappropriate business practices. The 
result of this dismantling is that the number of utility holding 
companies registered under PUHCA has been reduced to the current 14. 
These 14 electric and gas utility holding companies are required by 
PUHCA to operate under arbitrary investment caps that preclude them 
from investing in areas of need. Other utility companies are exempt 
from PUHCA's caps, but must operate primarily within one state in order 
to maintain their exemptions. Our nation's gas and electric utility 
companies, therefore, must operate principally within certain 
geographic ``boxes.'' This stifles innovation, hinders competition, and 
undermines development of regional electricity markets. This inhibits 
the very competition that Congress has sought to foster in the Energy 
Policy Act of 1992.
  America's natural gas and electric power industries, confronted by 
lower growth rates, environmental mandates and the need to emphasize 
conservation, are trying to become more than just suppliers of 
electricity and natural gas. To succeed in this new economic 
environment, they must become providers of energy information and 
services. PUHCA, however, stands in the way of the efforts by our 
nation's utility industry to serve consumers in a more efficient 
manner.
  The counterproductive restrictions that PUHCA places on these 
companies are based on historical assumptions that are no longer valid. 
The factors that existed when PUHCA was enacted in 1935 no longer exist 
today. Federal and state laws at that time were inadequate to protect 
consumers and investors 60 years ago. Today, federal and state 
regulations have become much more comprehensive and sensitive to market 
conditions. PUHCA, however, remains an economic drag on America's 
energy industry.

  The ability of state commissions to regulate holding company systems 
and, together with the development of regulation under the Federal 
Power Act of 1935 and the Natural Gas Act of 1938, have eliminated the 
regulatory ``gaps'' that existed in 1935 with respect to wholesale 
transactions in interstate commerce. The expanded ability of state 
commissions and the FERC to regulate inter-affiliate transactions has 
rendered the 1935 Act unnecessary.
  Simply put, America no longer can afford the Public Utility Holding 
Company Act of 1935. Using conservative estimates, the cost of this law 
runs in to the billions of dollars. Restrictions of the ability of 
companies registered under PUHCA to diversify range from $2 billion to 
$4.5 billion in present value terms. PUHCA's utility integration 
restrictions impose social costs between $1 billion and $8 billion. In 
addition, the administrative costs of complying with the 1935 Acts 
requirements are substantial.
  Our legislation would reform regulation of utility holding companies 
by repealing the duplicative SEC-related provisions of the Public 
Utility Holding Company Act of 1935, while assuring that the SEC 
retains all of its non-PUHCA jurisdiction of securities and securities 
markets in order to protect investors. Our bill would put gas and 
electric power companies on an equal competitive footing, allowing them 
to take advantage of market opportunities that benefit investors and 
utility companies.
  Our legislation will remove those limitations on registered 
companies' corporate structures, financing and investments to which 
they alone have been subject. At the same time, however, under our 
legislation, registered companies will continue to be subject to all 
government regulation intended to protect investors to which other 
industry participants are subject. SEC authority under the 1935 Act, 
the Trust Indenture Act and State Blue Sky laws will all remain in 
place. Our bill will assure FERC access to those books, records, 
accounts, and other documents of holding companies, their affiliates 
and subsidiaries, that are relevant to costs incurred by a public 
utility company and are necessary for the protection of consumers with 
respect to rates.
  Our bill also gives states the right to inspect books and records 
that ``have been identified in reasonable detail in a proceeding before 
the State commission, are relevant to costs incurred by such public 
utility company and are necessary for the effective discharge of the 
State commission's responsibility with respect to such proceeding.''
  In the new environment confronting the utility industry, PUHCA has 
become nothing more than a bottleneck that constrains the ability of 
our nation's natural gas and electric power industries to serve 
consumers. PUHCA is an anachronism that burdens utility systems with 
costs and restrictions that impair their competitiveness and prevent 
them from adapting to the new and more competitive environment. PUHCA 
is no longer a solution because the problems of the 1930's have been 
replaced by

[[Page E1409]]

effective state and federal legislation and by the realities of today's 
marketplace. It is time for Congress to act on the recommendations of 
the SEC and enact our legislation.

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