Calling a proposed Securities and Exchange Commission rule contrary to public policy and law, as well as a "de facto repeal of major provisions of the Public Utility Holding Company Act of 1935," the City Council of New Orleans has asked the Securities and Exchange Commission to withdraw its proposed Rule 58.
"For more than 60 years, PUHCA has shed light on the activities of utility holding companies," said Council President James M. Singleton. "If the holding companies would like to install a dimmer switch, the Congress (em which is currently working on legislation to drastically restructure the industry (em is the right forum for their efforts, not the SEC."
Rule 58, which was scheduled to become effective on March 24, would authorize registered holding companies (em including Entergy, which the Council regulates (em to acquire securities of an "energy-related company." Holding companies could do this only if the aggregate investments do not exceed 15 percent of a holding company's capitalization, or $50 million. The Council believes that the SEC, by eliminating prohibitions contained in PUHCA, has become involved in matters that Congress must decide.
Specifically, the Council is opposed to the rule, because:
1) The SEC's definition of "energy-related" companies violates PUHCA by allowing a registered utility holding company to engage in many activities that are neither functionally related to its core business of operating an electric or gas public utility, nor part of a geographically integrated public utility system; and