I
105TH CONGRESS
2D SESSION
H. R. 3976
To repeal the Public Utility Holding Company Act of 1935, to enact the
Public Utility Holding Company Act of 1998, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 22, 1998
Mr. TAUZIN (for himself, Mr. BARTON of Texas, Mr. BILBRAY, Mr. COOKSEY,
Mr. DOOLITTLE, Mr. JOHN, Mr. MCCRERY, Mr. NORWOOD, Mr. PARKER,
Mr. WICKER, and Mr. YOUNG of Alaska) 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
1998, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Public Utility Holding
Company Act of 1998’’.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds that—
(1) the Public Utility Holding Company Act of
1935 was intended to facilitate the work of Federal
and State regulators by placing certain constraints
on the activities of holding company systems;
(2) developments since 1935, including changes
in other regulation and in the electric and gas indus-
tries, have called into question the continued rel-
evance of the model of regulation established by that
Act;
(3) there is a continuing need for limited Fed-
eral and State regulation in order to ensure the rate
protection of utility customers; and
(4) limited Federal regulation is necessary to
supplement the work of State commissions for the
continued rate protection of electric and gas utility
customers.
(b) PURPOSES.—The purposes of this Act are—
(1) to eliminate unnecessary regulation, yet
continue to provide for consumer protection by facili-
tating existing rate regulatory authority through im-
proved Federal and State commission access to
books and records of all companies in a holding com-
pany system, to the extent that such information is
relevant to rates paid by utility customers, while af-
fording companies the flexibility required to compete
in the energy markets; and
(2) to address protection of electric and gas
utility customers by providing for Federal and State
access to books and records of all companies in a
holding company system that are relevant to utility
rates.
SEC. 3. DEFINITIONS.
For purposes of this Act—
(1) the term ‘‘affiliate’’ of a company means
any company 5 percent or more of the outstanding
voting securities of which are owned, controlled, or
held with power to vote, directly or indirectly, by
such company;
(2) the term ‘‘associate company’’ of a company
means any company in the same holding company
system with such company;
(3) the term ‘‘Commission’’ means the Federal
Energy Regulatory Commission;
(4) the term ‘‘company’’ means a corporation,
partnership, association, joint stock company, busi-
ness trust, or any organized group of persons,
whether incorporated or not, or a receiver, trustee,
or other liquidating agent of any of the foregoing;
(5) the term ‘‘electric utility company’’ means
any company that owns or operates facilities used
for the generation, transmission, or distribution of
electric energy for sale;
(6) the terms ‘‘exempt wholesale generator’’
and ‘‘foreign utility company’’ have the same mean-
ings as in sections 32 and 33, respectively, of the
Public Utility Holding Company Act of 1935, as
those sections existed on the day before the effective
date of this Act;
(7) the term ‘‘gas utility company’’ means any
company that owns or operates facilities used for
distribution at retail (other than the distribution
only in enclosed portable containers or distribution
to tenants or employees of the company operating
such facilities for their own use and not for resale)
of natural or manufactured gas for heat, light, or
power;
(8) the term ‘‘holding company’’ means—
(A) any company that directly or indirectly
owns, controls, or holds, with power to vote, 10
percent or more of the outstanding voting secu-
rities of a public utility company or of a holding
company of any public utility company; and
(B) any person, determined by the Com-
mission, after notice and opportunity for hear-
ing, to exercise directly or indirectly (either
alone or pursuant to an arrangement or under-
standing with one or more persons) such a con-
trolling influence over the management or poli-
cies of any public utility company or holding
company as to make it necessary or appropriate
for the rate protection of utility customers with
respect to rates that such person be subject to
the obligations, duties, and liabilities imposed
by this Act upon holding companies;
(9) the term ‘‘holding company system’’ means
a holding company, together with its subsidiary com-
panies;
(10) the term ‘‘jurisdictional rates’’ means
rates established by the Commission for the trans-
mission of electric energy in interstate commerce,
the sale of electric energy at wholesale in interstate
commerce, the transportation of natural gas in inter-
state commerce, and the sale in interstate commerce
of natural gas for resale for ultimate public con-
sumption for domestic, commercial, industrial, or
any other use;
(11) the term ‘‘natural gas company’’ means a
person engaged in the transportation of natural gas
in interstate commerce or the sale of such gas in
interstate commerce for resale;
(12) the term ‘‘person’’ means an individual or
company;
(13) the term ‘‘public utility’’ means any person
who owns or operates facilities used for transmission
of electric energy in interstate commerce or sales of
electric energy at wholesale in interstate commerce;
(14) the term ‘‘public utility company’’ means
an electric utility company or a gas utility company;
(15) the term ‘‘State commission’’ means any
commission, board, agency, or officer, by whatever
name designated, of a State, municipality, or other
political subdivision of a State that, under the laws
of such State, has jurisdiction to regulate public util-
ity companies;
(16) the term ‘‘subsidiary company’’ of a hold-
ing company means—
(A) any company, 10 percent or more of
the outstanding voting securities of which are
directly or indirectly owned, controlled, or held
with power to vote, by such holding company;
and
(B) any person, the management or poli-
cies of which the Commission, after notice and
opportunity for hearing, determines to be sub-
ject to a controlling influence, directly or indi-
rectly, by such holding company (either alone or
pursuant to an arrangement or understanding
with one or more other persons) so as to make
it necessary for the rate protection of utility
customers with respect to rates that such per-
son be subject to the obligations, duties, and li-
abilities imposed by this Act upon subsidiary
companies of holding companies; and
(17) the term ‘‘voting security’’ means any se-
curity presently entitling the owner or holder thereof
to vote in the direction or management of the affairs
of a company.
SEC. 4. REPEAL OF THE PUBLIC UTILITY HOLDING COM-
PANY ACT OF 1935.
The Public Utility Holding Company Act of 1935 (15
U.S.C. 79a et seq.) is repealed, effective 12 months after
the date of enactment of this Act.
SEC. 5. FEDERAL ACCESS TO BOOKS AND RECORDS.
(a) IN GENERAL.—Each holding company and each
associate company thereof shall maintain, and shall make
available to the Commission, such books, accounts, memo-
randa, and other records as the Commission deems to be
relevant to costs incurred by a public utility or natural
gas company that is an associate company of such holding
company and necessary or appropriate for the protection
of utility customers with respect to jurisdictional rates for
the transmission of electric energy in interstate commerce,
the sale of electric energy at wholesale in interstate com-
merce, the transportation of natural gas in interstate com-
merce, and the sale in interstate commerce of natural gas
for resale for ultimate public consumption for domestic,
commercial, industrial, or any other use.
(b) AFFILIATE COMPANIES.—Each affiliate of a hold-
ing company or of any subsidiary company of a holding
company shall maintain, and make available to the Com-
mission, such books, accounts, memoranda, and other
records with respect to any transaction with another affili-
ate, as the Commission deems to be relevant to costs in-
curred by a public utility or natural gas company that is
an associate company of such holding company and nec-
essary or appropriate for the protection of utility cus-
tomers with respect to jurisdictional rates.
(c) HOLDING COMPANY SYSTEMS.—The Commission
may examine the books, accounts, memoranda, and other
records of any company in a holding company system, or
any affiliate thereof, as the Commission deems to be rel-
evant to costs incurred by a public utility or natural gas
company within such holding company system and nec-
essary or appropriate for the protection of utility cus-
tomers with respect to jurisdictional rates.
(d) CONFIDENTIALITY.—No member, officer, or em-
ployee of the Commission shall divulge any fact or infor-
mation that may come to his or her knowledge during the
course of examination of books, accounts, memoranda, or
other records as provided in this section, except as may
be directed by the Commission or by a court of competent
jurisdiction.
SEC. 6. STATE ACCESS TO BOOKS AND RECORDS.
(a) IN GENERAL.—Upon the written request of a
State commission having jurisdiction to regulate a public
utility company in a holding company system, and subject
to such terms and conditions as may be necessary and ap-
propriate to safeguard against unwarranted disclosure to
the public of any trade secrets or sensitive commercial in-
formation, a holding company or its associate company or
affiliate thereof, wherever located, shall produce for in-
spection books, accounts, memoranda, and other records
that—
(1) have been identified in reasonable detail in
a proceeding before the State commission;
(2) the State commission deems are relevant to
costs incurred by such public utility company; and
(3) are necessary for the effective discharge of
the responsibilities of the State commission with re-
spect to such proceeding.
(b) EFFECT ON STATE LAW.—Nothing in this section
shall preempt applicable State law concerning the provi-
sion of books, records, or any other information, or in any
way limit the rights of any State to obtain books, records,
or any other information under Federal law, contract, or
otherwise.
(c) COURT JURISDICTION.—Any United States dis-
trict court located in the State in which the State commis-
sion referred to in subsection (a) is located shall have ju-
risdiction to enforce compliance with this section.
SEC. 7. EXEMPTION AUTHORITY.
(a) RULEMAKING.—Not later than 90 days after the
date of enactment of this Act, the Commission shall pro-
mulgate a final rule to exempt from the requirements of
section 5 any person that is a holding company, solely with
respect to one or more—
(1) qualifying facilities under the Public Utility
Regulatory Policies Act of 1978;
(2) exempt wholesale generators; or
(3) foreign utility companies.
(b) OTHER AUTHORITY.—If, upon application or
upon its own motion, the Commission finds that the books,
records, accounts, memoranda, and other records of any
person are not relevant to the jurisdictional rates of a pub-
lic utility company, or if the Commission finds that any
class of transactions is not relevant to the jurisdictional
rates of a public utility company, the Commission shall
exempt such person or transaction from the requirements
of section 5.
SEC. 8. AFFILIATE TRANSACTIONS.
Nothing in this Act shall preclude the Commission
or a State commission from exercising its jurisdiction
under otherwise applicable law to determine whether a
public utility company may recover in rates any costs of
an activity performed by an associate company, or any
costs of goods or services acquired by such public utility
company from an associate company.
SEC. 9. APPLICABILITY.
No provision of this Act shall apply to, or be deemed
to include—
(1) the United States;
(2) a State or any political subdivision of a
State;
(3) any foreign governmental authority not op-
erating in the United States;
(4) any agency, authority, or instrumentality of
any entity referred to in paragraph (1), (2), or (3);
or