July 1, 2001
L.A. Loves a Loophole
There's no getting around it...
D'Amato Sends PUHCA Bill to Mark Up
"This is not an intent to strip away consumer protection," Sen. Alfonse M.
D'Amato (R-NY) told
a Senate panel about S. 1317, a bipartisan bill to repeal the Public Utility Holding Company Act (PUHCA).
D'Amato, chair of the Senate Banking, Housing and Urban Affairs Committee, received nods from federal and state regulators at the June 6 hearing, although each voiced reservations. Three utility chiefs spoke in favor of the legislation.
Consumer advocates took the opposite tack. John Hughes of the Coalition for Customer Choice in Electricity remained unconvinced that state commissions and Elizabeth A. Moler, Federal Energy Regulatory Commission (FERC) chair, could take on the PUHCA duties now performed by the Securities and Exchange Commission (SEC).
"The fact of life is she's going to need a lot of extra resources," Hughes said. "And I'm not convinced this Congress in this current climate is prepared to do that. . . . [And] at the state level. . . many [PUCs], if not most of them, are undergoing severe shortages of resources."
D'Amato nevertheless intends to move his
bill to mark up, two steps prior to Senate floor consideration.
As proposed, S. 1317 would: 1) give the FERC access to company books and records relevant to consumer rates, 2) give PUCs access to records of affiliate companies, and 3) allow the FERC or PUCs to determine whether a utility may recover, in rates, costs from affiliates.
"If there's to be robust competition in the electric power industry, we've got to get rid of unnecessary regulation that strains and prevents companies from adapting quickly and responding with flexibility to changing market circumstances," Sen. Frank H. Murkowski (R-AK) told the panel.
At his side, Sen. J. Bennett Johnston (D-LA) said that as states roll out retail wheeling, their plans could run up against PUHCA. "The problem is you're not going to be able to make retail wheeling effective unless you have competitors who can get in and take advantage of it."
Commenting on the FERC's proposed new role, Moler remarked:
"I have always thought of the SEC as a financial regulator. They don't do rates. We do rates. If you give the FERC adequate authority to oversee the transactions and don't grandfather too many of them . . . and give us the resources to do the job, I believe we can regulate these 'intracorporate' transactions."
But Larry Frimerman of the National Association of State Utility Consumer Advocates told the Senate committee: "Premature repeal or substantial reform of PUHCA will be controversial, given the current flaws in the structure of the electricity market. . . . These changes are too substantial to adopt without ensuring the appropriate mix of effective regulation and competition."
D'Amato responded: "Just putting up a wall saying to companies that they really can't compete unless they meet certain prescriptions . . . doesn't, to me, seem to promote competition.
"If you said to me, 'We're stripping away consumer protection,' I'd say 'Show me how, show me where, and I will see to it, through legislation, that we deal with that problem.' (em