[Congressional Record Volume 147, Number 12 (Tuesday, January 30, 2001)]
[Senate]
[Pages S710-S712]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. Shelby (for himself, Mr. Murkowski, Mr. Sarbanes, Mr. 
        Gramm, Mr. Dodd, Mr. Lott, Mr. Craig, and Mr. Crapo):
  S. 206. A bill to repeal the Public Utility Holding Company Act of 
1935, to enact the Public Utility Holding Company Act of 2001, and for 
other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. SHELBY. Mr. President, I rise today to introduce the Public 
Utility Holding Company Act of 2001. This bipartisan bill is designed 
to help America's energy consumers by repealing an antiquated law that 
is keeping the benefits of competition from reaching our citizens. I am 
pleased to be joined by Senators Gramm and Sarbanes, chairman and 
ranking member of the Committee on Banking, Housing, and Urban Affairs, 
Senator Murkowski, chairman of the Energy and Natural Resources 
Committee, Majority Leader Lott, and Senators Dodd, Craig, and Crapo in 
introducing this important legislation. Our bill, which closely tracks 
legislation voted out of the Senate Banking Committee with bipartisan 
support in the 106th Congress, repeals the Public Utility Holding 
Company Act of 1935, PUHCA.
  The original PUHCA legislation passed over 60 years ago in 1935. At 
that time, a few large holding companies controlled a great majority of 
the electric utilities and gas pipelines. However, such a limited 
number of providers no longer offer a majority of the utility service. 
In fact, over 80 percent of the utility holding companies are currently 
exempt from PUHCA.
  This legislation implements the recommendations that the Securities 
and Exchange Commission, SEC made first in 1981 and then again in 1995 
following an extensive study of the effects of this antiquated law on 
our energy markets. In the 1995 report entitled. ``The Regulation of 
Public-Utility Holding Companies,'' the Division of Investment 
Management recommended that Congress conditionally repeal the Act since 
``the current regulatory system imposes significant costs, indirect 
administrative charges and foregone economies of scale and scope . . 
.'' In the end, the report serves to highlight the fact that the 
regulatory restraints imposed by PUHCA on our electric and gas 
industries are counterproductive in today's competitive environment and 
are based on historical assumptions and industry models that are no 
longer valid.
  In order to ensure that ratepayers are protected, this bill provides 
the Federal Energy Regulatory Commission and the States access to the 
books and records of holding company systems that are relevant to the 
costs incurred by jurisdictional public utility companies. As a result, 
the regulatory framework to protect consumers is not only protected in 
this bill, but enhanced.
  Let me be clear about the effect of PUHCA repeal: it eliminates 
redundant and burdensome regulation while enhancing existing consumer 
protections.
  Mr. President, we are at a time in our nation's history when we are 
going to have to make some critical choices regarding our national 
energy policy. The fact is, future technological innovation and 
economic growth is contingent upon this country's ability to meet its 
ever increasing demand for energy. In order to do this, we need to 
modernize production systems, increase market competition, and strip 
away unnecessary regulations. Achieving these goals is going to be a 
difficult and time consuming process. However, repeal of this law would 
be the first step in the right direction.
  Mr. President, it has been a very long time since it first became 
clear that this out dated, Depression-era law had become an unnecessary 
constraint on the ability of American gas and electric utilities to 
compete. Unfortunately, the many bipartisan efforts to repeal PUHCA 
have not been successful. However, strong support still exists for its 
elimination. I believe that it is imperative that we achieve this goal 
in the 107th Congress.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 206

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Public Utility Holding 
     Company Act of 2001''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress finds that--
       (1) the Public Utility Holding Company Act of 1935 was 
     intended to facilitate the work of Federal and State 
     regulators by placing certain constraints on the activities 
     of holding company systems;
       (2) developments since 1935, including changes in other 
     regulation and in the electric and gas industries, have 
     called into question the continued relevance of the model of 
     regulation established by that Act;
       (3) there is a continuing need for State regulation in 
     order to ensure the rate protection of utility customers; and

[[Page S711]]

       (4) limited Federal regulation is necessary to supplement 
     the work of State commissions for the continued rate 
     protection of electric and gas utility customers.
       (b) Purposes.--The purposes of this Act are--
       (1) to eliminate unnecessary regulation, yet continue to 
     provide for consumer protection by facilitating existing rate 
     regulatory authority through improved Federal and State 
     commission access to books and records of all companies in a 
     holding company system, to the extent that such information 
     is relevant to rates paid by utility customers, while 
     affording companies the flexibility required to compete in 
     the energy markets; and
       (2) to address protection of electric and gas utility 
     customers by providing for Federal and State access to books 
     and records of all companies in a holding company system that 
     are relevant to utility rates.

     SEC. 3. DEFINITIONS.

       For purposes of this Act--
       (1) the term ``affiliate'' of a company means any company, 
     5 percent or more of the outstanding voting securities of 
     which are owned, controlled, or held with power to vote, 
     directly or indirectly, by such company;
       (2) the term ``associate company'' of a company means any 
     company in the same holding company system with such company;
       (3) the term ``Commission'' means the Federal Energy 
     Regulatory Commission;
       (4) the term ``company'' means a corporation, partnership, 
     association, joint stock company, business trust, or any 
     organized group of persons, whether incorporated or not, or a 
     receiver, trustee, or other liquidating agent of any of the 
     foregoing;
       (5) the term ``electric utility company'' means any company 
     that owns or operates facilities used for the generation, 
     transmission, or distribution of electric energy for sale;
       (6) the terms ``exempt wholesale generator'' and ``foreign 
     utility company'' have the same meanings as in sections 32 
     and 33, respectively, of the Public Utility Holding Company 
     Act of 1935 (15 U.S.C. 79z-5a, 79z-5b), as those sections 
     existed on the day before the effective date of this Act;
       (7) the term ``gas utility company'' means any company that 
     owns or operates facilities used for distribution at retail 
     (other than the distribution only in enclosed portable 
     containers or distribution to tenants or employees of the 
     company operating such facilities for their own use and not 
     for resale) of natural or manufactured gas for heat, light, 
     or power;
       (8) the term ``holding company'' means--
       (A) any company that directly or indirectly owns, controls, 
     or holds, with power to vote, 10 percent or more of the 
     outstanding voting securities of a public utility company or 
     of a holding company of any public utility company; and
       (B) any person, determined by the Commission, after notice 
     and opportunity for hearing, to exercise directly or 
     indirectly (either alone or pursuant to an arrangement or 
     understanding with one or more persons) such a controlling 
     influence over the management or policies of any public 
     utility company or holding company as to make it necessary 
     or appropriate for the rate protection of utility 
     customers with respect to rates that such person be 
     subject to the obligations, duties, and liabilities 
     imposed by this Act upon holding companies;
       (9) the term ``holding company system'' means a holding 
     company, together with its subsidiary companies;
       (10) the term ``jurisdictional rates'' means rates 
     established by the Commission for the transmission of 
     electric energy in interstate commerce, the sale of electric 
     energy at wholesale in interstate commerce, the 
     transportation of natural gas in interstate commerce, and the 
     sale in interstate commerce of natural gas for resale for 
     ultimate public consumption for domestic, commercial, 
     industrial, or any other use;
       (11) the term ``natural gas company'' means a person 
     engaged in the transportation of natural gas in interstate 
     commerce or the sale of such gas in interstate commerce for 
     resale;
       (12) the term ``person'' means an individual or company;
       (13) the term ``public utility'' means any person who owns 
     or operates facilities used for transmission of electric 
     energy in interstate commerce or sales of electric energy at 
     wholesale in interstate commerce;
       (14) the term ``public utility company'' means an electric 
     utility company or a gas utility company;
       (15) the term ``State commission'' means any commission, 
     board, agency, or officer, by whatever name designated, of a 
     State, municipality, or other political subdivision of a 
     State that, under the laws of such State, has jurisdiction to 
     regulate public utility companies;
       (16) the term ``subsidiary company'' of a holding company 
     means--
       (A) any company, 10 percent or more of the outstanding 
     voting securities of which are directly or indirectly owned, 
     controlled, or held with power to vote, by such holding 
     company; and
       (B) any person, the management or policies of which the 
     Commission, after notice and opportunity for hearing, 
     determines to be subject to a controlling influence, directly 
     or indirectly, by such holding company (either alone or 
     pursuant to an arrangement or understanding with one or more 
     other persons) so as to make it necessary for the rate 
     protection of utility customers with respect to rates that 
     such person be subject to the obligations, duties, and 
     liabilities imposed by this Act upon subsidiary companies of 
     holding companies; and
       (17) the term ``voting security'' means any security 
     presently entitling the owner or holder thereof to vote in 
     the direction or management of the affairs of a company.

     SEC. 4. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 
                   1935.

       The Public Utility Holding Company Act of 1935 (15 U.S.C. 
     79 et seq.) is repealed.

     SEC. 5. FEDERAL ACCESS TO BOOKS AND RECORDS.

       (a) In General.--Each holding company and each associate 
     company thereof shall maintain, and shall make available to 
     the Commission, such books, accounts, memoranda, and other 
     records as the Commission deems to be relevant to costs 
     incurred by a public utility or natural gas company that is 
     an associate company of such holding company and necessary or 
     appropriate for the protection of utility customers with 
     respect to jurisdictional rates.
       (b) Affiliate Companies.--Each affiliate of a holding 
     company or of any subsidiary company of a holding company 
     shall maintain, and shall make available to the Commission, 
     such books, accounts, memoranda, and other records with 
     respect to any transaction with another affiliate, as the 
     Commission deems to be relevant to costs incurred by a public 
     utility or natural gas company that is an associate company 
     of such holding company and necessary or appropriate for the 
     protection of utility customers with respect to 
     jurisdictional rates.
       (c) Holding Company Systems.--The Commission may examine 
     the books, accounts, memoranda, and other records of any 
     company in a holding company system, or any affiliate 
     thereof, as the Commission deems to be relevant to costs 
     incurred by a public utility or natural gas company within 
     such holding company system and necessary or appropriate for 
     the protection of utility customers with respect to 
     jurisdictional rates.
       (d) Confidentiality.--No member, officer, or employee of 
     the Commission shall divulge any fact or information that may 
     come to his or her knowledge during the course of examination 
     of books, accounts, memoranda, or other records as provided 
     in this section, except as may be directed by the Commission 
     or by a court of competent jurisdiction.

     SEC. 6. STATE ACCESS TO BOOKS AND RECORDS.

       (a) In General.--Upon the written request of a State 
     commission having jurisdiction to regulate a public utility 
     company in a holding company system, the holding company or 
     any associate company or affiliate thereof, other than such 
     public utility company, wherever located, shall produce for 
     inspection books, accounts, memoranda, and other records 
     that--
       (1) have been identified in reasonable detail in a 
     proceeding before the State commission;
       (2) the State commission deems are relevant to costs 
     incurred by such public utility company; and
       (3) are necessary for the effective discharge of the 
     responsibilities of the State commission with respect to such 
     proceeding.
       (b) Limitation.--Subsection (a) does not apply to any 
     person that is a holding company solely by reason of 
     ownership of one or more qualifying facilities under the 
     Public Utility Regulatory Policies Act of 1978.
       (c) Confidentiality of Information.--The production of 
     books, accounts, memoranda, and other records under 
     subsection (a) shall be subject to such terms and conditions 
     as may be necessary and appropriate to safeguard against 
     unwarranted disclosure to the public of any trade secrets or 
     sensitive commercial information.
       (d) Effect on State Law.--Nothing in this section shall 
     preempt applicable State law concerning the provision of 
     books, records, or any other information, or in any way limit 
     the rights of any State to obtain books, records, or any 
     other information under any other Federal law, contract, or 
     otherwise.
       (e) Court Jurisdiction.--Any United States district court 
     located in the State in which the State commission referred 
     to in subsection (a) is located shall have jurisdiction to 
     enforce compliance with this section.

     SEC. 7. EXEMPTION AUTHORITY.

       (a) Rulemaking.--Not later than 90 days after the effective 
     date of this Act, the Commission shall promulgate a final 
     rule to exempt from the requirements of section 5 any person 
     that is a holding company, solely with respect to one or 
     more--
       (1) qualifying facilities under the Public Utility 
     Regulatory Policies Act of 1978;
       (2) exempt wholesale generators; or
       (3) foreign utility companies.
       (b) Other Authority.--The Commission shall exempt a person 
     or transaction from the requirements of section 5, if, upon 
     application or upon the motion of the Commission--
       (1) the Commission finds that the books, records, accounts, 
     memoranda, and other records of any person are not relevant 
     to the jurisdictional rates of a public utility or natural 
     gas company; or
       (2) the Commission finds that any class of transactions is 
     not relevant to the jurisdictional rates of a public utility 
     or natural gas company.

[[Page S712]]

     SEC. 8. AFFILIATE TRANSACTIONS.

       Nothing in this Act shall preclude the Commission or a 
     State commission from exercising its jurisdiction under 
     otherwise applicable law to determine whether a public 
     utility company, public utility, or natural gas company may 
     recover in rates any costs of an activity performed by an 
     associate company, or any costs of goods or services acquired 
     by such public utility company from an associate company.

     SEC. 9. APPLICABILITY.

       No provision of this Act shall apply to, or be deemed to 
     include--
       (1) the United States;
       (2) a State or any political subdivision of a State;
       (3) any foreign governmental authority not operating in the 
     United States;
       (4) any agency, authority, or instrumentality of any entity 
     referred to in paragraph (1), (2), or (3); or
       (5) any officer, agent, or employee of any entity referred 
     to in paragraph (1), (2), or (3) acting as such in the course 
     of his or her official duty.

     SEC. 10. EFFECT ON OTHER REGULATIONS.

       Nothing in this Act precludes the Commission or a State 
     commission from exercising its jurisdiction under otherwise 
     applicable law to protect utility customers.

     SEC. 11. ENFORCEMENT.

       The Commission shall have the same powers as set forth in 
     sections 306 through 317 of the Federal Power Act (16 U.S.C. 
     825e-825p) to enforce the provisions of this Act.

     SEC. 12. SAVINGS PROVISIONS.

       (a) In General.--Nothing in this Act prohibits a person 
     from engaging in or continuing to engage in activities or 
     transactions in which it is legally engaged or authorized to 
     engage on the effective date of this Act.
       (b) Effect on Other Commission Authority.--Nothing in this 
     Act limits the authority of the Commission under the Federal 
     Power Act (16 U.S.C. 791a et seq.) (including section 301 of 
     that Act) or the Natural Gas Act (15 U.S.C. 717 et seq.) 
     (including section 8 of that Act).

     SEC. 13. IMPLEMENTATION.

       Not later than 18 months after the date of enactment of 
     this Act, the Commission shall--
       (1) promulgate such regulations as may be necessary or 
     appropriate to implement this Act (other than section 6); and
       (2) submit to the Congress detailed recommendations on 
     technical and conforming amendments to Federal law necessary 
     to carry out this Act and the amendments made by this Act.

     SEC. 14. TRANSFER OF RESOURCES.

       All books and records that relate primarily to the 
     functions transferred to the Commission under this Act shall 
     be transferred from the Securities and Exchange Commission to 
     the Commission.

     SEC. 15. EFFECTIVE DATE.

       This Act shall take effect 18 months after the date of 
     enactment of this Act.

     SEC. 16. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such funds as may 
     be necessary to carry out this Act.

     SEC. 17. CONFORMING AMENDMENT TO THE FEDERAL POWER ACT.

       Section 318 of the Federal Power Act (16 U.S.C. 825q) is 
     repealed.
                                 ______