Feb 06 2002
WASHINGTON, DC -- U.S. Senator Richard C. Shelby (R-AL), today commented on S.1766, the Public Utility Holding Company Act:
“Mr. Chairman, as you know, the Senate Banking Committee, who has jurisdiction over this issue, reported S. 206, The Public Utility Holding Company Act of 2001, favorably by a vote of 18-1. Nevertheless, I appreciate your calling this hearing and welcome the opportunity to clarify and reinforce the need for reform of the Public Utilities Holding Company Act (PUHCA) of 1935.”
“If the purpose of this hearing is to bring to light the problems with Enron and their business practices and how PUHCA could have saved the day, then I think that this hearing is misguided and inappropriately timed. If, on the other hand, the goal is to highlight the realities of PUHCA in light of Enron’s collapse, then I think that we should take this opportunity to distinguish fact from fiction – just to be sure we are all working with the same information.
“It has long been my belief that PUHCA has become a barrier to innovation and competition in the utility industry. Numerous studies have found that the conduct that gave rise to the Act has all but disappeared and since PUHCA’s inception in 1935 comprehensive federal securities regulations have been developed that, in essence, duplicate those required by the Act. At the same time, changes in the industry have brought into question the continuing relevance of a monopoly-based model of regulation.
“Mr. Chairman, I believe the facts clearly show that Enron’s collapse had nothing to do with the Public Utility Holding Company Act of 1935. Enron was not subject to the registration requirements of PUHCA. The SEC had numerous opportunities to review Enron’s activities to determine whether or not the provisions of PUHCA applied.
“After close review and consideration of the Act, the SEC either issued no action letters -- which I would interpret to mean, the SEC did not believe Enron was engaging in activities covered under the Act – or they issued a single state exemption; which was clearly provided for under the law. I am pleased that Commissioner Hunt is here to detail for us what PUHCA was intended to do, under what circumstances it was intended to apply, and how it was ultimately implemented.
“For more than a decade, industry, regulators, Congress, and consumer groups have called for repeal and/or reform of PUHCA. I appreciate this opportunity to review PUHCA and clarify the need for reform. I look forward to the Committee’s future action on more pressing energy issues that will allow us to work together to develop a comprehensive national energy policy as opposed to belaboring issues such as PUHCA that have been considered by the Senate Banking Committee in the 105th, 106th, and 107th Congresses.”