[BETA] Fortnightly

UHCA REPEAL NOW. In her article, "Why PUHCA Repeal Is Still on Hold," published Feb. 15, 1998, Beverly Jones suggests the reason legislation to repeal the Public Utility Holding Company Act of 1935 hasn't passed Congress is because there hasn't yet been an "open dialogue" among all interests to deal with a wide range of electricity restructuring issues, including PUHCA.

Open dialogue is always important, and a review of the past two years shows that not only has such a dialogue taken place, but the case for immediate repeal of PUHCA, on a standalone basis, is stronger than ever.

Senate and House committees have held numerous hearings and workshops, but no consensus has been reached on a wide range of restructuring issues (em such as definition and treatment of stranded costs, public power subsidies, federally imposed mandates on states and provider of last resort obligation. There seems to be little prospect of a consensus soon.

Utilities themselves disagree on how many of these issues should be addressed.

Yet the gas and electric utility companies (em and other potential competitors (em know PUHCA is the number-one barrier blocking their ability to compete as more states restructure their electricity and natural gas markets without a federal mandate.

Interestingly, Jones acknowledges this by pointing out that "where states have acted on retail unbundling, PUHCA repeal is necessary to facilitate the entry of enough new players to make retail competition viable."

She also correctly identifies an important issue in the first part of her article, the "fear [that] PUHCA repeal will leave residential consumers exposed to market power abuses." While that fear is often raised, the facts dispel it. In fact, later in her article, Jones correctly states that "market concentration may not threaten consumers where there is the potential for new entrants to challenge incumbent market leaders." The need for new entrants is the very reason why PUHCA needs to be repealed.

With PUHCA repealed, consumers not only will have more choices, but they will continue to be protected by a wide range of antitrust, ratemaking and other consumer protection laws that have been put into place since PUHCA's enactment in 1935.

So, where do we go from here? It is important to recognize that with so many states implementing their own restructuring initiatives, Congress will not serve the interests of consumers without acting on the barriers that fall exclusively within its jurisdiction: Only Congress can repeal PUHCA.

This point was made loud and clear by Senate Majority Leader Trent Lott (R-Miss.), who said on the Senate floor last Nov. 8: "PUHCA is the biggest single federal obstacle to the advancement of retail competition, and it should be repealed now. Several states have already adopted or are in the process of adopting retail competition plans without comprehensive [federal] utility restructuring legislation. We can't allow the federal government to block progress in the states¼ Now is the time for PUHCA repeal."

The effort to repeal PUHCA has moved further than any other legislative initiative. S. 621, the PUHCA repeal bill currently pending, has 23 cosponsors. The