Senate Banking Committee approves PUHCA repeal

The Senate Banking Committee on a 19-1 vote Tuesday reported out a measure to repeal the Public Utility Holding Company Act (PUHCA), which controls corporate structure, diversification, and affiliate transactions in the utility industry. While passage by the Senate is not yet a probability, Daniel Ford, an analyst with Lehman Brothers, said a boost from Vice Pres. Dick Cheney's energy task force would be a help.


By the OGJ Online Staff

HOUSTON, Apr. 23 -- The Senate Banking Committee on a 19-1 vote Tuesday reported out a measure to repeal the Public Utility Holding Company Act (PUHCA), which controls corporate structure, diversification, and affiliate transactions in the utility industry.

It will now be up to Sen. Trent Lott (R-Miss.), the majority leader, to schedule a vote by the full Senate. Sen. Richard Shelby (R-Ala.) introduced SB. 206, the Public Utility Holding Company Act of 2001, Jan. 31.

While passage by the Senate is not yet a probability, Daniel Ford, an analyst with Lehman Brothers, said a boost from Vice Pres. Dick Cheney's energy task force would be a help.

PUHCA repeal could attract more nontraditional players to electric merger and acquisition activity such as AES Corp., Dynegy Inc., and foreign companies, Ford said in an investment note earlier this week. It would make it easier to conclude noncontiguous deals and deals involving nonutility buyers.

PUHCA repeal legislation has won approval in the Senate Banking Committee in three of the last five sessions and two of the last three sessions on the Senate floor. However, the measure has stalled in the House.

Repeal now on a stand-alone basis will only make current electricity problems worse, said Alan H. Richardson, CEO of the American Public Power Association (APPA).

Richardson said repeal should be part of a broader electricity bill that would promote "real" wholesale competition in the electric utility industry. An APPA study found the number of registered utility holding companies has more than doubled in the past 9 years, expanding to 30 from 14 since 1992. The 30 registered holding companies own 70 electric utilities that serve 32% of all electricity customers.

When measured by number of electric customers, 13 of the 25 largest utilities, including all affiliates and subsidiaries, are registered holding companies, APPA said.

SB. 206 would repeal key features of PUHCA, eliminating geographic limitations on registered holding companies, and changing access to company books and records. Richardson claimed the bills would shift the consumer watchdog role from the federal government to the states, which are "just not equipped to deal with interstate issues."

PUHCA was enacted in 1935 to simplify the structure of the electric utility industry and prevent consumer and stockholder abuses. Utility holding companies subject to PUHCA must register with the Securities and Exchange Commission, which is charged with enforcing PUHCA provisions.

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