Mar 29 2001

BANKING SUBCOMMITTEE HOLDS HEARING ON SHELBY LEGISLATION

Public Utilities Holding Company Act of 2001 Aids Energy Consumers

U.S. Senator Richard C. Shelby (R-AL) is the author of energy legislation considered today by a Banking Subcommittee. The Public Utility Holding Company Act of 2001 (PUHCA) was introduced by Senator Shelby earlier this year. The legislation is designed to aid energy consumers by encouraging market competition and eliminating redundant and burdensome regulation.

The legislation repeals the Public Utilities Holding Company Act of 1935 and transfers its consumer protection functions from the Securities and Exchange Commission (SEC) to the Federal Energy Regulatory Commission (FERC) and the state public service commissions. Senator Shelby has introduced this legislation in the last few Congresses and the legislation has been given bipartisan support and passage in the Committee on Banking, Housing and Urban Affairs.

"My bill would streamline the current regulatory framework by eliminating burdensome and redundant regulations, without compromising consumer and investor protections," said Shelby. "The original PUHCA legislation has served its purpose. Now, 65 years later, the time has come for Congress to bring this legislation into the current century."

Currently, there are only nineteen registered holding company systems subject to PUHCA regulations, while over one hundred utility holding company systems are exempt from the Act. PUHCA prevents these nineteen registered holding companies from competing effectively with the exempt utility holding company systems and does not provide consumers or investors with any additional protections. Moreover, all holding companies (both registered and exempt) are limited in their ability to expand outside of their existing territory.

"The modernization of this dated legislation will benefit all utility holding companies, energy consumers and investors, by lowering costs and allowing companies to diversify into new industries," added Shelby. "Recent events across the country have illustrated the critical need for changes to our energy policy. Clearly, there is an immediate need for this reform legislation."

Senator Shelby's legislation has been recommended by the SEC, in a comprehensive report on PUHCA dated June 1995 and in testimony before the Committee on Banking, Housing and Urban Affairs in the 104th, 105th, and 106th Congresses.