[Congressional Record Volume 149, Number 54 (Thursday, April 3, 2003)]
[Extensions of Remarks]
[Page E664]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     INTRODUCTION OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 2003

                                 ______
                                 

                   HON. CHARLES W. ``CHIP'' PICKERING

                             of mississippi

                    in the house of representatives

                        Thursday, April 3, 2003

  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help America's energy consumers by repealing an outdated law that 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 in the energy marketplace. I am 
pleased to be joined by the Gentleman from New York, Mr. Towns in 
introducing this important legislation. This bill, which is nearly 
identical to legislation I introduced in the last Congress and very 
similar to legislation approved by the Senate in the last Congress, 
would repeal a New Deal Law, the Public Utility Holding Company Act of 
1935 (PUHCA).
  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extensive study by the SEC of the effects of this outdated law on 
today's energy markets.
  PUHCA is a law that has long outlived its usefulness. It imposes 
unnecessary costs on consumers and directly undermines the intent of 
current 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 the 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. There are 
now 28 top electric and gas utility holding companies that 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 the development of regional electricity markets. Moreover, 
such a circumstance inhibits the very competition that Congress has 
sought to foster in our national energy policy.
  More specifically, PUHCA 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.
  Interestingly enough, the financial collapse of Enron underscored the 
need to encourage--not discourage--the entry of stable, regulated, 
asset-backed energy companies into the marketplace. Ironically, it is 
just these types of companies that are effectively barred from 
investing in new markets by PUHCA. Enron was opposed to PUHCA repeal 
because its continued existence imposed competitive handicaps on well-
established, asset-backed energy companies in emerging competitive 
markets.

  The counterproductive restrictions 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. 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 have 
further rendered the 1935 Act unnecessary. In addition, important 
market power issues will continue to be reviewed by FERC, DoJ and the 
FTC.
  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-PUCHA 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 investors and 
utility companies.
  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 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 
enhance the ability of FERC and the State utility commissions to access 
the books and records of utilities and their subsidiaries in order to 
improve customer protection. This would be in addition to the ongoing 
authority of state and federal regulators to oversee rates charged by 
regulated utilities in retail and wholesale markets.
  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.

                          ____________________