I

104TH CONGRESS

2D SESSION H. R. 3601

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

Public Utility Holding Company Act of 1996, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 6, 1996

Mr. TAUZIN (for himself, Mr. BARTON of Texas, Mr. HAYES, Mr. NORWOOD,

Mr. LINDER, Mr. OXLEY, Mr. STEARNS, Mr. TOWNS, and Mr. BAKER

of Louisiana) introduced the following bill; which was referred to the

Committee on Commerce

A BILL

To repeal the Public Utility Holding Company Act of 1935,

to enact the Public Utility Holding Company Act of

1996, 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 1996’’.
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1 TITLE I—REPEAL OF THE PUBLIC UTILITY

2 HOLDING COMPANY ACT OF 1935

3 SEC. 101. PURPOSE.

4 (a) The Public Utility Holding Company Act of 1935

5 was intended to facilitate the work of State and Federal

6 regulators by placing certain constraints on the activities

7 of holding company systems. Developments since 1935, in8 cluding changes in other regulation and in the industry

9 itself, have called into question the continued relevance of

10 the model of regulation established by the statute.

11 (b) There is, however, a continuing need for limited

12 Federal regulation in this area to ensure the rate protec13 tion of utility consumers. The Public Utility Holding Com14 pany Act of 1996 is intended to eliminate unnecessary reg15 ulation, yet still provide for consumer protection by provid16 ing for State commission access to books and records of

17 all companies in a holding company system, and for Fed18 eral audit authority and oversight of affiliate transactions,

19 to the extent that such activities affect rates, while, at the

20 same time, affording companies the flexibility required to

21 compete in today’s energy markets.
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1 SEC. 102. REPEAL OF THE PUBLIC UTILITY HOLDING COM2 PANY ACT OF 1935.

3 The Public Utility Holding Company Act of 1935, as

4 amended, is hereby repealed, effective one year from the

5 date of enactment of this Act.

6 TITLE II—ENACTMENT OF THE PUBLIC

7 UTILITY HOLDING COMPANY ACT OF 1996

8 SEC. 201. PURPOSE.

9 Limited Federal regulation is necessary to supple10 ment the work of State commissions for the continued rate

11 protection of electric and gas utility consumers. This Act

12 is intended to address these concerns by providing for

13 Federal and State access to books and records of all com14 panies in a holding company system and for federal over15 sight of affiliate transactions, to the extent that such ac16 tivities affect rates.

17 SEC. 202. DEFINITIONS.

18 (a) When used in this title:

19 (1) ‘‘Person’’ means an individual or company.

20 (2) ‘‘Company’’ means a corporation, joint

21 stock company, partnership, association, business

22 trust, organized group of persons, whether incor23 porated or not, or a receiver or receivers, trustee or

24 trustees of any of the foregoing.

25 (3) ‘‘Electric utility company’’ means any com26 pany that owns or operates facilities used for the
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1 generation, transmission, or distribution of electric

2 energy for sale.

3 (4) ‘‘Gas utility company’’ means any company

4 that owns or operates facilities used for distribution

5 at retail (other than the distribution only in enclosed

6 portable containers) of natural or manufactured gas

7 for heat, light or power.

8 (5) ‘‘Public utility company’’ means an electric

9 utility company or gas utility company but does not

10 mean a qualifying facility as defined in the Public

11 Utility Regulatory Policies Act of 1992, or an ex12 empt wholesale generator or a foreign utility com13 pany defined by the Energy Policy Act of 1992.

14 (6) ‘‘Holding company’’ means (A) any com15 pany that directly or indirectly owns, controls, or

16 holds with power to vote, 10 percent or more of the

17 outstanding voting securities of a public utility com18 pany or of a holding company of any public utility

19 company; and (B) any person, determined by the

20 Commission, after notice and opportunity for hear21 ing, to exercise directly or indirectly (either alone or

22 pursuant to an arrangement or understanding with

23 one or more persons) such a controlling influence

24 over the management or policies of any public utility

25 or holding company as to make it necessary or ap-
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1 propriate for the protection of consumers with re2 spect to rates that such person be subject to the ob3 ligations, duties, and liabilities imposed in this title

4 upon holding companies.

5 (7) ‘‘Subsidiary company’’ of a holding com6 pany means (A) any company 10 percent or more of

7 the outstanding voting securities of which are di8 rectly or indirectly owned, controlled, or held with

9 power to vote, by such holding company; and (B)

10 any person the management or policies of which the

11 Commission, after notice and opportunity for hear12 ing, determines to be subject to a controlling influ13 ence, directly or indirectly, by such holding company

14 (either alone or pursuant to an arrangement or un15 derstanding with one or more other persons) so as

16 to make it necessary for the protection of consumers

17 with respect to rates that such person be subject to

18 the obligations, duties, and liabilities imposed in this

19 title upon subsidiary companies of holding compa20 nies.

21 (8) ‘‘Holding company system’’ means a hold22 ing company together with its subsidiary companies.

23 (9) ‘‘Associate company’’ of a company means

24 any company in the same holding company system

25 with such company.
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1 (10) ‘‘Affiliate’’ of a company means any com2 pany 5 percent or more of whose outstanding voting

3 securities are owned, controlled, or held with power

4 to vote, directly or indirectly, by such company.

5 (11) ‘‘Voting security’’ means any security pres6 ently entitling the owner or holder thereof to vote in

7 the direction or management of the affairs of a com8 pany.

9 (12) ‘‘Commission’’ means the Federal Energy

10 Regulatory Commission.

11 (13) ‘‘State Commission’’ means any commis12 sion, board, agency, or officer, by whatever name

13 designated, of a State, municipality, or other politi14 cal subdivision of a State that under the law of such

15 State has jurisdiction to regulate public utility com16 panies.

17 (b) No provision in this Act shall apply to, or be

18 deemed to include: (1) the United States, (2) a State or

19 any political subdivision of a State, (3) any foreign govern20 mental authority not operating in the United States, (4)

21 any agency, authority, or instrumentality of any of the

22 foregoing, or (5) any officer, agent, or employee of any

23 of the foregoing acting as such in the course of his official

24 duty.
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1 SEC. 203. EXEMPTIONS.

2 (a) The provisions of this Act shall not apply to any

3 person previously exempted, by rule or order, from regula4 tion under the Public Utility Holding Company Act of

5 1935 and such person shall continue to be exempted from

6 the provisions of this Act: Provided, That the Commission

7 may institute proceedings to terminate such exemption if

8 the termination of such exemption would be necessary for

9 regulating the rates of a public utility company and nec10 essary for the protection of consumers.

11 (b) The Commission, by rules and regulations, or by

12 order upon application, may conditionally or uncondition13 ally exempt any person or transaction, or any class or

14 classes of persons or transactions, from any provision or

15 provisions of this title or of any rule or regulation there16 under, if the Commission finds that regulation of such per17 son or transaction is not relevant to the rates of a public

18 utility company; in considering whether to grant such an

19 exemption, the Commission shall consult with the affected

20 State commissions.

21 SEC. 204. FEDERAL ACCESS TO BOOKS AND RECORDS.

22 (a) Every holding company and subsidiary company

23 thereof shall maintain, and make available to the Commis24 sion, such books, records, accounts, and other documents

25 as the Commission deems relevant to costs incurred by

26 a public utility company that is an associate company of
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1 such holding company and necessary or appropriate for

2 the protection of consumers with respect to rates.

3 (b) Every affiliate of a holding company or of any

4 subsidiary company thereof shall maintain, and make

5 available to the Commission, such books, records, ac6 counts, and other documents with respect to any trans7 action with another affiliate, as the Commission deems rel8 evant to costs incurred by a public utility company that

9 is an associate company of such holding company and nec10 essary or appropriate for the protection of consumers with

11 respect to rates.

12 (c) The Commission may examine the books and

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

14 any affiliate thereof, as the Commission deems relevant

15 to costs incurred by a public utility company within such

16 holding company system and necessary or appropriate for

17 the protection of consumers with respect to rates.

18 (d) No member, officer, or employee of the Commis19 sion shall divulge any fact or information that may come

20 to his knowledge during the course of examination of

21 books, accounts, or other information as hereinbefore pro22 vided, except insofar as he may be directed by the Com23 mission or by a court.
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1 SEC. 205. STATE ACCESS TO BOOKS AND RECORDS.

2 (a) Upon the written request of a State commission

3 having jurisdiction to regulate a public utility company in

4 a holding company system, and subject to such terms and

5 conditions as may be necessary and appropriate to safe6 guard against unwarranted disclosure to the public of any

7 trade secrets or sensitive commercial information, a hold8 ing company or its associate company or affiliate thereof,

9 wherever located, shall produce for inspection such books

10 and records as have been identified in reasonable detail

11 in a proceeding before the State commission, are relevant

12 to costs incurred by such public utility company and are

13 necessary for the effective discharge of the State commis14 sion’s responsibilities with respect to such proceeding.

15 (b) Nothing in this section shall preempt applicable

16 State law concerning the provision of records and other

17 information, or in any way limit a State’s rights to obtain

18 books and records and other information under Federal

19 law, contract, or otherwise.

20 SEC. 206. AFFILIATE TRANSACTIONS.

21 Nothing in this Act shall preclude the Commission

22 or a State commission from exercising its jurisdiction

23 under otherwise applicable law to determine whether a

24 public utility company may recover in rates any costs of

25 an activity performed by an associate company, or any
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1 costs of goods or services acquired by such public utility

2 company from an associate company.

3 SEC. 207. EFFECT ON OTHER REGULATION.

4 Nothing in this Act shall preclude a State commission

5 from exercising its jurisdiction under otherwise applicable

6 law to protect utility consumers.

7 SEC. 208. ENFORCEMENT.

8 The Commission shall have the same powers as set

9 forth in Sections 306 through 317 of the Federal Power

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

11 this Act.

12 SEC. 209. SAVINGS PROVISION.

13 Nothing in this Act prohibits a person from engaging

14 in activities in which it is legally engaged or authorized

15 to engage on the effective date of the Public Utility Hold16 ing Company Act of 1996, provided that it continues to

17 comply with the terms of any authorization, whether by

18 rule or by order.

19 SEC. 210. IMPLEMENTATION.

20 The Commission shall promulgate regulations nec21 essary or appropriate to implement this Act not later than

22 one year after the date of the enactment of this title.

23 SEC. 211. RESOURCES.

24 All books and records that relate primarily to the

25 function hereby vested in the Commission shall be trans-
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1 ferred from the Securities and Exchange Commission to

2 the Commission. It is the sense of the Congress that, sub3 ject to the approval of the Director of the Office of Man4 agement and Budget and the Chairman of the Securities

5 and Exchange Commission all personnel of the Office of

6 Public Utility Regulation of the Securities and Exchange

7 Commission as of the date of enactment of this title should

8 be transferred to the Commission.

9 SEC. 212. EFFECTIVE DATE.

10 This Act shall take effect one year after the date of

11 enactment.

12 SEC. 213. SEVERABILITY.

13 If any provision of this Act, or the application of such

14 provision to any person or circumstance, shall be held in15 valid, the remainder of the Act, and the application of

16 such provision to persons or circumstances other than

17 those as to which it is held invalid, shall not be affected

18 thereby.

19 TITLE III—CONFORMING CHANGES TO OTHER

20 STATUTES

21 SEC. 301. FEDERAL POWER ACT.

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

23 285g) if hereby repealed.

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