HTML _ Electric Utility Restructuring
20-Mar-2001

Abstract: In the past, the electric utility industry was considered one of the nation's most regulated industries, with states regulating utilities' retail and intrastate activities and the federal government regulating utilities interstate and wholesale activities. The foundation of federal regulation of electric utilities is the Public Utilities Holding Company Act of 1935 (PUHCA) and the Federal Power Act (FPA). These laws were enacted to eliminate unfair practices and other abuses by electricity and gas holding companies by requiring federal control in regulation of interstate public utility holding companies. Prior to PUHCA, electricity holding companies were characterized as having excessive consumer rates, high debt-to-equity ratios, and unreliable service. Under PUHCA, the Securities and Exchange Commission (SEC) regulates mergers and diversification proposals of holding companies whose subsidiaries engage in retail electricity or natural gas distribution. In addition, PUHCA requires that before purchasing securities or property from another company, a holding company is required to file for approval with the SEC. The SEC can exempt a utility from PUHCA if its business operations and those of its subsidiaries occur within one state or contiguous states. [read report]

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