William J. Froehlich has been appointed director of the re-established Office of Administrative Litigation at the Federal Energy Regulatory Commission (FERC). Froehlich has...
April 23, 1996
On behalf of our members, we want to express our continuing appreciation for the leadership you and your colleagues are showing in seeking enactment of S. 1317, a bill to repeal the Public Utility Holding Company Act of 1935, while assuring appropriate consumer and investor protection. As you know, the '35 Act imposes duplicative, unnecessary, and burdensome requirements that are outdated and do not reflect current circumstances in the gas and electric utility industry. We have strong indications of an increasing bipartisan consensus (em in Congress and outside of it (em that repeal is timely now. The Securities and Exchange Commission (SEC) a year ago reached that conclusion; the National Association of Regulatory Utility Commissioners (NARUC) agreed that repeal, subject to conditions, is appropriate; and many trade groups have endorsed repeal. We certainly will be continuing our efforts in support of repeal and look forward to working with you in the process of hearings and markup on S. 1317.
We have seen the letter dated April 4, 1996, to you and other senators from certain special interest groups calling into question the timing of repeal. For several reasons, the letter reflects a lack of understanding of the utility industry.
First, it is hard to take seriously a letter that alleges "S. 1317 reduces the ability of states to exercise local regulatory control over complex utility corporate organizations." The repeal of PUHCA will assure, not reduce, local control by eliminating the so-called "Ohio Power Gap", which the Federal Energy Regulatory Commission (FERC) and state commissions recognize reduces their authority.
Second, the letter states that "PUHCA continues to prevent some degree of unwarranted concentration of market power." This statement is extremely misleading. PUHCA does not address utility market-power issues. If it did, then Congress would not have enacted the Federal Power Act at the very same time PUHCA was passed, or the Natural Gas Act enacted two years before. Moreover, there is no utility merger proposed or in place that has not been reviewed by FERC and the state commissions. Under S. 1317, FERC and the states will continue to review the potential consumer impact of utility mergers. These economic regulators have the experience and expertise to address market-power issues, have done so, and will continue to do so.
Third, the April 4 letter asserts that S. 1317 would somehow affect environmental law. No provision of PUHCA addresses environmental protection, and when PUHCA is repealed, the operating utilities that are holding company affiliates will remain subject to exactly the same environmental requirements to which they are subject today; and the holding companies will remain subject to exactly the same disclosure requirements concerning environmental performance to which all other publicly traded companies are held.
The intent of the April 4 letter is clear from the remaining assertion that it makes (em that PUHCA repeal should await Congressional action on restructuring the electric utility industry. As you know, and as senators have made clear in statements on the floor and at hearings held by the Senate Energy Committee, there is no consensus today