II

106TH CONGRESS

1ST SESSION S. 313

To repeal the Public Utility Holding Company Act of 1935, to enact the

Public Utility Holding Company Act of 1999, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 27, 1999

Mr. SHELBY (for himself, Mr. DODD, Mr. GRAMM, Mr. SARBANES, Mr. MURKOWSKI, Mr. LOTT, Mr. MACK, Mr. CRAIG, and Mr. BROWNBACK) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

To repeal the Public Utility Holding Company Act of 1935,

to enact the Public Utility Holding Company Act of

1999, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Public Utility Holding

5 Company Act of 1999’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—The Congress finds that—

8 (1) the Public Utility Holding Company Act of

9 1935 was intended to facilitate the work of Federal
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1 and State regulators by placing certain constraints

2 on the activities of holding company systems;

3 (2) developments since 1935, including changes

4 in other regulation and in the electric and gas indus5 tries, have called into question the continued rel6 evance of the model of regulation established by that

7 Act;

8 (3) there is a continuing need for State regula9 tion in order to ensure the rate protection of utility

10 customers; and

11 (4) limited Federal regulation is necessary to

12 supplement the work of State commissions for the

13 continued rate protection of electric and gas utility

14 customers.

15 (b) PURPOSES.—The purposes of this Act are—

16 (1) to eliminate unnecessary regulation, yet

17 continue to provide for consumer protection by facili18 tating existing rate regulatory authority through im19 proved Federal and State commission access to

20 books and records of all companies in a holding com21 pany system, to the extent that such information is

22 relevant to rates paid by utility customers, while af23 fording companies the flexibility required to compete

24 in the energy markets; and
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1 (2) to address protection of electric and gas

2 utility customers by providing for Federal and State

3 access to books and records of all companies in a

4 holding company system that are relevant to utility

5 rates.

6 SEC. 3. DEFINITIONS.

7 For purposes of this Act—

8 (1) the term ‘‘affiliate’’ of a company means

9 any company, 5 percent or more of the outstanding

10 voting securities of which are owned, controlled, or

11 held with power to vote, directly or indirectly, by

12 such company;

13 (2) the term ‘‘associate company’’ of a company

14 means any company in the same holding company

15 system with such company;

16 (3) the term ‘‘Commission’’ means the Federal

17 Energy Regulatory Commission;

18 (4) the term ‘‘company’’ means a corporation,

19 partnership, association, joint stock company, busi20 ness trust, or any organized group of persons,

21 whether incorporated or not, or a receiver, trustee,

22 or other liquidating agent of any of the foregoing;

23 (5) the term ‘‘electric utility company’’ means

24 any company that owns or operates facilities used
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1 for the generation, transmission, or distribution of

2 electric energy for sale;

3 (6) the terms ‘‘exempt wholesale generator’’

4 and ‘‘foreign utility company’’ have the same mean5 ings as in sections 32 and 33, respectively, of the

6 Public Utility Holding Company Act of 1935, as

7 those sections existed on the day before the effective

8 date of this Act;

9 (7) the term ‘‘gas utility company’’ means any

10 company that owns or operates facilities used for

11 distribution at retail (other than the distribution

12 only in enclosed portable containers or distribution

13 to tenants or employees of the company operating

14 such facilities for their own use and not for resale)

15 of natural or manufactured gas for heat, light, or

16 power;

17 (8) the term ‘‘holding company’’ means—

18 (A) any company that directly or indirectly

19 owns, controls, or holds, with power to vote, 10

20 percent or more of the outstanding voting secu21 rities of a public utility company or of a holding

22 company of any public utility company; and

23 (B) any person, determined by the Com24 mission, after notice and opportunity for hear25 ing, to exercise directly or indirectly (either
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1 alone or pursuant to an arrangement or under2 standing with one or more persons) such a con3 trolling influence over the management or poli4 cies of any public utility company or holding

5 company as to make it necessary or appropriate

6 for the rate protection of utility customers with

7 respect to rates that such person be subject to

8 the obligations, duties, and liabilities imposed

9 by this Act upon holding companies;

10 (9) the term ‘‘holding company system’’ means

11 a holding company, together with its subsidiary com12 panies;

13 (10) the term ‘‘jurisdictional rates’’ means

14 rates established by the Commission for the trans15 mission of electric energy in interstate commerce,

16 the sale of electric energy at wholesale in interstate

17 commerce, the transportation of natural gas in inter18 state commerce, and the sale in interstate commerce

19 of natural gas for resale for ultimate public con20 sumption for domestic, commercial, industrial, or

21 any other use;

22 (11) the term ‘‘natural gas company’’ means a

23 person engaged in the transportation of natural gas

24 in interstate commerce or the sale of such gas in

25 interstate commerce for resale;
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1 (12) the term ‘‘person’’ means an individual or

2 company;

3 (13) the term ‘‘public utility’’ means any person

4 who owns or operates facilities used for transmission

5 of electric energy in interstate commerce or sales of

6 electric energy at wholesale in interstate commerce;

7 (14) the term ‘‘public utility company’’ means

8 an electric utility company or a gas utility company;

9 (15) the term ‘‘State commission’’ means any

10 commission, board, agency, or officer, by whatever

11 name designated, of a State, municipality, or other

12 political subdivision of a State that, under the laws

13 of such State, has jurisdiction to regulate public util14 ity companies;

15 (16) the term ‘‘subsidiary company’’ of a hold16 ing company means—

17 (A) any company, 10 percent or more of

18 the outstanding voting securities of which are

19 directly or indirectly owned, controlled, or held

20 with power to vote, by such holding company;

21 and

22 (B) any person, the management or poli23 cies of which the Commission, after notice and

24 opportunity for hearing, determines to be sub25 ject to a controlling influence, directly or indi-
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1 rectly, by such holding company (either alone or

2 pursuant to an arrangement or understanding

3 with one or more other persons) so as to make

4 it necessary for the rate protection of utility

5 customers with respect to rates that such per6 son be subject to the obligations, duties, and li7 abilities imposed by this Act upon subsidiary

8 companies of holding companies; and

9 (17) the term ‘‘voting security’’ means any se10 curity presently entitling the owner or holder thereof

11 to vote in the direction or management of the affairs

12 of a company.

13 SEC. 4. REPEAL OF THE PUBLIC UTILITY HOLDING COM14 PANY ACT OF 1935.

15 The Public Utility Holding Company Act of 1935 (15

16 U.S.C. 79a et seq.) is repealed.

17 SEC. 5. FEDERAL ACCESS TO BOOKS AND RECORDS.

18 (a) IN GENERAL.—Each holding company and each

19 associate company thereof shall maintain, and shall make

20 available to the Commission, such books, accounts, memo21 randa, and other records as the Commission deems to be

22 relevant to costs incurred by a public utility or natural

23 gas company that is an associate company of such holding

24 company and necessary or appropriate for the protection

25 of utility customers with respect to jurisdictional rates for
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1 the transmission of electric energy in interstate commerce,

2 the sale of electric energy at wholesale in interstate com3 merce, the transportation of natural gas in interstate com4 merce, and the sale in interstate commerce of natural gas

5 for resale for ultimate public consumption for domestic,

6 commercial, industrial, or any other use.

7 (b) AFFILIATE COMPANIES.—Each affiliate of a hold8 ing company or of any subsidiary company of a holding

9 company shall maintain, and make available to the Com10 mission, such books, accounts, memoranda, and other

11 records with respect to any transaction with another affili12 ate, as the Commission deems to be relevant to costs in13 curred by a public utility or natural gas company that is

14 an associate company of such holding company and nec15 essary or appropriate for the protection of utility cus16 tomers with respect to jurisdictional rates.

17 (c) HOLDING COMPANY SYSTEMS.—The Commission

18 may examine the books, accounts, memoranda, and other

19 records of any company in a holding company system, or

20 any affiliate thereof, as the Commission deems to be rel21 evant to costs incurred by a public utility or natural gas

22 company within such holding company system and nec23 essary or appropriate for the protection of utility cus24 tomers with respect to jurisdictional rates.
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1 (d) CONFIDENTIALITY.—No member, officer, or em2 ployee of the Commission shall divulge any fact or infor3 mation that may come to his or her knowledge during the

4 course of examination of books, accounts, memoranda, or

5 other records as provided in this section, except as may

6 be directed by the Commission or by a court of competent

7 jurisdiction.

8 SEC. 6. STATE ACCESS TO BOOKS AND RECORDS.

9 (a) IN GENERAL.—Upon the written request of a

10 State commission having jurisdiction to regulate a public

11 utility company in a holding company system, the holding

12 company or any associate company or affiliate thereof,

13 other than such public utility company, wherever located,

14 shall produce for inspection books, accounts, memoranda,

15 and other records that—

16 (1) have been identified in reasonable detail in

17 a proceeding before the State commission;

18 (2) the State commission deems are relevant to

19 costs incurred by such public utility company; and

20 (3) are necessary for the effective discharge of

21 the responsibilities of the State commission with re22 spect to such proceeding.

23 (b) LIMITATION.—Subsection (a) does not apply to

24 any person that is a holding company solely by reason of
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1 ownership of one or more qualifying facilities under the

2 Public Utility Regulatory Policies Act.

3 (c) CONFIDENTIALITY OF INFORMATION.—The pro4 duction of books, accounts, memoranda, and other records

5 under subsection (a) shall be subject to such terms and

6 conditions as may be necessary and appropriate to safe7 guard against unwarranted disclosure to the public of any

8 trade secrets or sensitive commercial information.

9 (d) EFFECT ON STATE LAW.—Nothing in this sec10 tion shall preempt applicable State law concerning the pro11 vision of books, records, or any other information, or in

12 any way limit the rights of any State to obtain books,

13 records, or any other information under any other Federal

14 law, contract, or otherwise.

15 (e) COURT JURISDICTION.—Any United States dis16 trict court located in the State in which the State commis17 sion referred to in subsection (a) is located shall have ju18 risdiction to enforce compliance with this section.

19 SEC. 7. EXEMPTION AUTHORITY.

20 (a) RULEMAKING.—Not later than 90 days after the

21 effective date of this Act, the Commission shall promul22 gate a final rule to exempt from the requirements of sec23 tion 5 any person that is a holding company, solely with

24 respect to one or more—
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1 (1) qualifying facilities under the Public Utility

2 Regulatory Policies Act of 1978;

3 (2) exempt wholesale generators; or

4 (3) foreign utility companies.

5 (b) OTHER AUTHORITY.—If, upon application or

6 upon its own motion, the Commission finds that the books,

7 records, accounts, memoranda, and other records of any

8 person are not relevant to the jurisdictional rates of a pub9 lic utility or natural gas company, or if the Commission

10 finds that any class of transactions is not relevant to the

11 jurisdictional rates of a public utility or natural gas com12 pany, the Commission shall exempt such person or trans13 action from the requirements of section 5.

14 SEC. 8. AFFILIATE TRANSACTIONS.

15 Nothing in this Act shall preclude the Commission

16 or a State commission from exercising its jurisdiction

17 under otherwise applicable law to determine whether a

18 public utility company, public utility, or natural gas com19 pany may recover in rates any costs of an activity per20 formed by an associate company, or any costs of goods

21 or services acquired by such public utility company from

22 an associate company.

23 SEC. 9. APPLICABILITY.

24 No provision of this Act shall apply to, or be deemed

25 to include—
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1 (1) the United States;

2 (2) a State or any political subdivision of a

3 State;

4 (3) any foreign governmental authority not op5 erating in the United States;

6 (4) any agency, authority, or instrumentality of

7 any entity referred to in paragraph (1), (2), or (3);

8 or

9 (5) any officer, agent, or employee of any entity

10 referred to in paragraph (1), (2), or (3) acting as

11 such in the course of his or her official duty.

12 SEC. 10. EFFECT ON OTHER REGULATIONS.

13 Nothing in this Act precludes the Commission or a

14 State commission from exercising its jurisdiction under

15 otherwise applicable law to protect utility customers.

16 SEC. 11. ENFORCEMENT.

17 The Commission shall have the same powers as set

18 forth in sections 306 through 317 of the Federal Power

19 Act (16 U.S.C. 825d–825p) to enforce the provisions of

20 this Act.

21 SEC. 12. SAVINGS PROVISIONS.

22 (a) IN GENERAL.—Nothing in this Act prohibits a

23 person from engaging in or continuing to engage in activi24 ties or transactions in which it is legally engaged or au25 thorized to engage on the effective date of this Act.
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1 (b) EFFECT ON OTHER COMMISSION AUTHORITY.—

2 Nothing in this Act limits the authority of the Commission

3 under the Federal Power Act (16 U.S.C. 791a et seq.)

4 (including section 301 of that Act) or the Natural Gas

5 Act (15 U.S.C. 717 et seq.) (including section 8 of that

6 Act).

7 SEC. 13. IMPLEMENTATION.

8 Not later than 18 months after the date of enactment

9 of this Act, the Commission shall—

10 (1) promulgate such regulations as may be nec11 essary or appropriate to implement this Act (other

12 than section 6); and

13 (2) submit to the Congress detailed rec14 ommendations on technical and conforming amend15 ments to Federal law necessary to carry out this Act

16 and the amendments made by this Act.

17 SEC. 14. TRANSFER OF RESOURCES.

18 All books and records that relate primarily to the

19 functions transferred to the Commission under this Act

20 shall be transferred from the Securities and Exchange

21 Commission to the Commission.

22 SEC. 15. EFFECTIVE DATE.

23 This Act shall take effect 18 months after the date

24 of enactment of this Act.
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1 SEC. 16. AUTHORIZATION OF APPROPRIATIONS.

2 There are authorized to be appropriated such funds

3 as may be necessary to carry out this Act.

4 SEC. 17. CONFORMING AMENDMENT TO THE FEDERAL

5 POWER ACT.

6 Section 318 of the Federal Power Act (16 U.S.C.

7 825q) is repealed.

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