The central station system is the most cost-effective way to provide utility service, but that's beside the point. Customers don't care about 'utility service.'
Life After PUHCA
N.J. BPU enacts new rules to insulate utilities from holding companies.
that owns a New Jersey gas or electric utility from investing more than 25 percent of the combined assets of its utility and utility-related subsidiaries into businesses unrelated to the utility industry. For example, if a utility holding company has $100 million of assets in utility and utility-related businesses, the company could invest only up to $25 million in nonutility businesses such as insurance companies, oil refineries, or any other type of business. These rules reflect growing evidence that investments by utility holding companies outside the utility sector usually are unsuccessful. Recognizing that utilities have expertise in many energy-related fields, the rules exempt investments in areas such as energy management, energy conservation, and greenhouse-gas services.
New Jersey’s PUHCA rules also include a number of operational requirements that address the day-to-day interactions between the utility and utility holding company. The operational rules, which went into effect in April 2009, aim at establishing a regular flow of communication between the NJBPU and utility holding companies that would allow the NJBPU to adequately monitor potential abuses and take preventive measures, if necessary. These rules include preserving the NJBPU’s access to books and records, establishing ring-fencing protections to protect ratepayers from utility capital impairment, dividend restrictions, and ensuring the NJBPU retains appropriate supervision over service agreements between a utility and its holding company. Coupled with the structural requirements, the operational rules help ensure that New Jersey’s utilities are safely insulated from their utility holding companies. Such rules go a long way in replacing the protections in PUHCA 1935 , but with a 21st-century perspective.