[Congressional Record Volume 147, Number 37 (Tuesday, March 20, 2001)]
[Extensions of Remarks]
[Page E401]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              INTRODUCTION OF LEGISLATION TO REPEAL PUHCA

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                   HON. CHARLES W. ``CHIP'' PICKERING

                             of mississippi

                    in the house of representatives

                        Tuesday, March 20, 2001

  Mr. PICKERING. Mr. Speaker, I am pleased to introduce a bill today to 
help America's energy consumers by repealing an outdated law that 
serves as a barrier to competition for increased supply and 
transmission in today's troubled energy marketplace. This bill, which 
is identical to legislation introduced by Chairman Tauzin in the last 
Congress and very similar to legislation approved by the Senate Banking 
Committee in the last Congress, would repeal a New Deal Law, the Public 
Utility Holding Company Act of 1935 (PUHCA).
  I am pleased to be joined by Representative Towns, Representative 
Stearns and Chairman Tauzin in introducing this important bipartisan 
legislation. I will be working closely with these members as we seek to 
bring an end to this outdated policy which has outlived its usefulness 
and purpose. Chairman Tauzin has been the author of this legislation in 
the past and I am proud to take his mantle forward. In addition, 
Representative Stearns and Towns have long been involved in the fight 
to repeal PUHCA and I look forward to working with them and having 
their leadership on this effort.
  This legislation is a bipartisan initiative. The current Republican 
and previous Democratic Administrations have called for the repeal of 
PUHCA. Further, the bill 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extensive study by the SEC of the effects of this outdated law on the 
energy markets.
  Mr. Speaker, one of the factors that has contributed to the current 
California energy crisis and will stand in the way of any permanent 
solution is the structural and financial restraints imposed under 
PUHCA. PUHCA unnecessarily restricts the flow of capital into the 
troubled California market, which is inhibiting the development of new 
generation and transmission capacity. Repeal of PUHCA would eliminate 
these articial structural and financial barriers and could contribute 
tot he alleviation of California's energy problem and the Western 
regional energy problem.
  PUHCA is a law that has long 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 
completion and capital 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 the federal and state level. PUHCA's primary 
purpose was to simplify complex holding company structures and to limit 
inappropriate business practices. This purpose was accomplished in the 
1950's and the SEC has recommended to Congress that PUHCA be repealed 
since 1981.
  Today, a significant number of electric and gas utility holding 
companies are required by
  PUHCA also delays or, in some cases, prevents registered companies 
from offering new products and services to their consumers. As a 
barrier to entry for gas and electric utilities in all states, PUHCA 
limits investment and growth opportunities on a nationwide basis in the 
gas and electric industries. PUHCA also unnecessarily restricts the 
flow of capital into all states thereby inhibiting the development of 
new transmission and generation capacity. PUHCA stands in the way of 
the efforts by our nation's utility industry to serve consumers in a 
more competitive manner.
  The counterproductive restricts that PUHCA places on the natural gas 
and electric power industries 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 66 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.
  Mr. Speaker, I first became aware of PUHCA's outdated restrictions 
when I served as an aide to Senator Lott on the Telecommunications Act 
of 1996. At the time, we were trying to modernize the Communications 
Act of 1934, another command and control New Deal legislation like 
PUHCA. PUHCA had to be amended to allow competition in our 
telecommunications industry. Today, we need to repeal the 1935 Act and 
replace it with one that makes sense in today's energy and capital 
markets.
  There exists no reason to retain this outdated regulation. 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 have further rendered the 
1935 Act unnecessary. In addition, important market power issues will 
continue to be reviewed by FERC, the Department of Justice and the 
Federal Trade Commission.
  This legislation would reform the 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. The bill would put gas and 
electric power companies on an equal competitive footing, allowing them 
to take advantage of market opportunities that benefit consumers, 
investors and utility companies.
  Registered companies will continue to be subject to the same 
government regulation intended to protect consumers and investors as 
that to which other industry participants are subject. SEC authority 
under the Securities Act, Exchange Act, Investment Advisers Act, and 
Trust Indenture Act will all remain in place. The State securities 
commissions will also have available to them the various State Blue-Sky 
laws. The bill will assure FERC access to those books, records, 
accounts, and other documents of holding companies, their affiliates 
and subsidiaries, which are relevant to costs incurred by a public 
utility company and which are necessary for the protection of consumers 
with respect to rates.
  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 effective state and federal legislation and by the 
realities of today's marketplace. Simply put, America no longer can 
afford the Public Utility Holding Company Act of 1935. It is time for 
Congress to act on the recommendations of the SEC and to enact this 
legislation.

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