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E-M:/ [Fwd: PUHCA Repeal Markup]



Besides being urgent and highly relevant to Michigan, the post
below from Public Citizen appears to have some ideas that might
be adapted for Michigan's utility deregulation, particularly a regulator

right to force divestiture.

--
Phil Shepard
shepard@pilot.msu.edu
(517) 332-0761

-- BEGIN included message

=====================================
   Public Citizen's Critical Mass Energy Project
=====================================

===== Original Message from HIGLEY@CITIZEN (Charlie Higley) at 2/01/99 1:32
pm

It's PUHCA time, once again.

At 11:00 Wednesday, February 3 (Dirkson 534), the Senate Banking Committee
will mark-up a bill to repeal the Public Utility Holding Company Act of
1935.

The bill, S. 313, was recently introduced by Sen. Richard Shelby
(R-Alabama), along with co-sponsors Christopher Dodd (D-Connecticut), Phil
Gramm (R-Texas), Paul Sarbanes (D-Maryland), Frank Murkowski (R-Alaska),
Trent Lott (R-Mississippi), Connie Mack (R- Florida), Larry Craig (R-Idaho),
and Sam Brownback (R-Kansas).

S. 313 appears to be very similar to the previous PUHCA repeal bill, S. 621
(D'Amato), although there are few changes I have not had time to analyze.

In short, S. 313 would repeal PUHCA, and would give the Federal Energy
Regulatory Commission the authority to inspect the books and records of any
company within a utility holding company system. Similar authority is
granted to State regulatory commissions.

Public Citizen opposes stand-alone PUHCA repeal.  At the end of this message
are our recommendations for provisions that must be enacted into law BEFORE
any major changes are made to PUHCA.

Nevertheless, it is likely that the Senate Banking Committee will quickly
approve S. 313, so we will need to try to stop PUHCA on the Senate Floor.
It is too early to tell when the full senate would consider a PUHCA repeal
bill, but it's possible the investor-owned utilities are going to push for
early consideration, because last time many groups were able to mount an
effective campaign against PUHCA repeal.

Previously, Sen. Dale Bumpers (D-Arkansas) protected PUHCA from repeal.
With Sen. Bumper's retirement, no new protector of PUHCA has stepped
forward.

So, now is the time to urge your Senators to oppose stand alone PUHCA
repeal.

Below is a letter (dusted off from last year) that we urge you to send to
your Senator.

In a separate email I will circulate a letter for sign-ons.

Thanks,

-Charlie Higley-
Public Citizen

**********

Dear Senator:

Please oppose S. 313, which would repeal the Public Utility Holding Company
Act of 1935 (PUHCA).

Repealing PUHCA would harm consumers, small businesses, the environment, and
the development of competitive markets for electricity.  PUHCA repeal would
place the interests of the largest utility holding companies above the
interests of tens of thousands of small businesses and millions of
consumers.

Repeal of PUHCA would increase the risk of cross-subsidies flowing from the
regulated utilities of the holding company to its unregulated businesses.
Utility ratepayers will pay higher rates as they subsidize other businesses,
especially foreign ventures, without receiving any benefits.

The repeal of PUHCA would permit some of the largest and most aggressive
monopolies to engage in the subsidized destruction of thousands of small
businesses that can't draw guaranteed profits from captive customers.

The repeal of PUHCA would allow utility holding companies to increase their
expansion into non-utility businesses, creating multi-national empires
beyond the reach of state and federal regulators, who will be unable to
regulate these combines with affiliates scattered all over the world.

PUHCA repeal will result in a massive wave of mergers, reducing the number
of potential competitors and increasing the market power of surviving
utilities.  With increased market power, utilities will fight against energy
efficiency and renewable energy, which directly compete for market share
with their existing fleet of polluting fossil fuel and nuclear power plants.
 Therefore, the repeal of PUHCA may increase our dependence on fossil and
nuclear electricity, thereby increasing damage to public health and the
environment.

Please oppose S. 313.

Sincerely,



*********
Public Citizen's Recommendations on How to Improve PUHCA

The following provisions must be enacted into law before any major changes
are made to the Public Utility Holding Company Act of 1935.

Divestiture Authority. To eliminate problems of market power, federal and
state regulators must have the authority to order utilities to divest
certain operations or to sell off power plants.

Anti-Trust Enforcement.  The Federal Trade Commission and the Department of
Justice, as well as state attorneys general must expand and enforce
anti-trust protections.

Creation of Regional, Non-Profit, Public Transmission Companies (Public
Transcos). Transmission systems must be owned and operated as "common
carriers." Three public transcos will own and operate the transmission
systems of the Eastern Interconnection, the Western Interconnection, and the
Texas Interconnection. Each public transco will schedule and dispatch
generation, plan for transmission improvements using integrated resource
planning principles, maintain system reliability, provide ancillary
services, and provide non-discriminatory access to transmission services at
affordable rates approved by FERC. Each public transco should be non-profit
corporations with a board of directors comprised of consumers, not suppliers
(suppliers can make recommendations through advisory panels).  All
transmission assets (regardless of ownership) in each Interconnection will
be purchased by the public transco at depreciated original cost (book
value).  Transmission assets to be purchased include the transmission wires,
transmission substations, and all control area facilities. All transmission
workers currently employed by utilities or the North American Electric
Reliability Council (and its regional councils) should become employees of
the appropriate public transco. Public transcos, as providers of nothing
other than regulated transmission service, must have no subsidiaries and no
affiliations with anyone, and cannot diversify into any other business.
Transmission prices will be regulated by FERC.  The public transcos will be
responsible for transmission planning, which must be approved by affected
state regulatory commissions, which will continue to have authority over
facility siting.

Distribution Systems. Distribution systems must be owned and operated as
"common carriers," providing non-discriminatory access to distribution
services at affordable rates approved by the state regulatory commission.
Distribution systems should be organized as stand-alone companies, with no
subsidiaries and no affiliations with anyone.  Distribution companies must
be prohibited from diversifying into any other business.

Cap on Market Share.  No generation-owning company (or affiliate) can
control more than 20% of any generation market.

Access to Information.  Access to information by consumers, regulators, and
competing companies will be crucial for the development of competitive
markets. The Energy Information Administration, the Federal Energy
Regulatory Commission, the Securities and Exchange Commission, the
Environmental Protection Agency, state regulatory commissions, and other
federal and state agencies, must continue to gather and make publicly
available important data on the financial and operating characteristics of
the electric power industry.  FERC must make all relevant transmission
information publicly available on a real-time basis. State regulatory
authorities must make all relevant distribution information publicly
available on a real-time basis. State regulatory authorities must provide
adequate protection for customer proprietary information.  Aggregated
information on customers must be made available to all parties on
non-discriminatory terms.  Individual customer data should not be divulged
unless the customer has provided knowledgeable written consent.

###


Korey Hartwich

Organizer/Legislative Associate
Critical Mass Energy Project
Public Citizen
215 Pennsylvania Ave., SE
Washington, DC 20003
Tel: 202-546-4996
Fax: 202-547-7392

Questions about the CMEP-list can be directed to cmep@citizen.org

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