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Washington, D.C. - U.S. Senator Mike Enzi, R-Wyo., and his Senate Banking Committee colleagues passed a bill today that Enzi says would "give more flexibility to the emerging energy markets to meet the challenges created by our modern economy."

The committee passed S. 206, the Public Utility Holding Company Act of 2001 by a vote of 19-1 with Sen. Debbie Stabenow, D-Mo., the lone dissenter.

The bill would repeal the Public Utility Holding Act (PUHCA)of 1935, a law that Enzi believes puts a regulatory damper on Wyoming's and the nation's ability to fulfill its energy needs.

Enzi offered two amendments to the bill. The amendments passed by unanimous consent.

One amendment would create a task force that will study competition in the wholesale and retail electric energy marketplace. Enzi said this study is the first step in resolving a list of issues put forward by traditional opponents to PUHCA repeal, a coalition made up of the rural cooperatives and the public power groups that represent the municipal power utilities. But he said there are other remaining issues that will need to be worked out between now and the time the bill comes to the floor. These issues include: agency oversight of mergers and acquisitions, generation asset sales, and the authority of the Federal Energy Regulatory Commission to require structural remedies in the case of anti-competitive and unfair conditions in electric markets.

Another amendment offered by Enzi and Sen. Paul Sarbanes, D-Md., addresses concerns about cross subsidization and the possibility that utility holding companies could pass on unfair and unreasonable costs to consumers, particularly when those costs have no business being included in electricity rates. The amendment would reserve the ability of Federal Energy Regulatory Committee, under authority of the Federal Power Act, to require that jurisdictional rates are just and reasonable, and that the agency have the ability to deny or approve the passing on of costs and to prevent improper cross subsidization between holding company affiliate companies.

The following is a statement Enzi gave at the beginning of today's committee markup of the bill.

Statement of Senator Michael B. Enzi
Banking Committee Mark Up of
S. 206, the Public Utility Holding Company Act of 2001
Tuesday, April 24, 2001



Mr. Chairman, members of the committee, I am grateful for the opportunity to be here today in order to mark up the legislation, S. 206, the Public Utility Holding Company Act of 2001, a bill that would repeal the Public Utility Holding Company Act of 1935.

I was fortunate to have held my first hearing as chairman of the Securities and Investments Subcommittee on this bill, just one month ago. At that time, we reviewed the history of PUHCA and the situation that existed within the United States at the time the statute was enacted. There is no question that 65 years ago the United States was suffering from abuses created by an unregulated holding company system. Because of the uncontrolled layering and interrelated affiliate transactions, ratepayers and communities were confronted with unreliable service, exorbitant rates, and no transparency.

At the time of the hearing I stated that emerging energy markets needed more flexibility to meet the unknown challenges created by our modern economy, and that PUHCA was becoming more and more of an impediment to that flexibility. I continue to stand behind these statements and I continue to believe that the United States needs all of the tools and options available to respond to the dramatic changes we are now experiencing in the electric energy marketplace.

The situation in California, with rising energy prices and power shortages, is now affecting many other Western states. There is no other way to explain the situation than to say a there has been a failure to plan for our future energy needs. By failing to develop a national energy policy, we have allowed our dependence on foreign energy supplies to place our nation at great risk.

As we begin to develop an effective energy strategy, we are finding more and more limitations imposed by redundant federal regulations. These limitations threaten to have a tremendous impact on areas that need more potential investment in order to develop the energy infrastructure to supply the demands of our modern high-tech economy. Our own state of Wyoming could be hamstrung severely without adequate flexibility, diversity, and planning in the emerging energy policy. For that reason I have committed myself to getting this bill passed, and not just out of the committee, but to develop a legislative strategy that will result in actual PUHCA repeal.

In the history of this legislation, the bill has consistently passed out of this committee but has not had the momentum or support to go any further. The reason has been the strict

opposition raised by opponents made up of the rural electricity cooperatives and the public power groups representing the municipal power companies.

Wyoming is again unique in its relationship between these different energy suppliers. Wyoming is a hybrid of public, cooperative and investor owned utilities. Approximately 70 percent of Wyoming's land base is represented by rural cooperatives. But the state's personality is such that 100 percent of the people still consider themselves to be rural and although only 30 percent of the people are actually served by cooperatives, the Cowboy state still sides with the cowboys. This places me in a situation where, along with my role as chairman over the subcommittee with jurisdiction over PUHCA, I am compelled to find a way to reconcile the opposing sides of this legislation.

The past four weeks have been very busy with efforts to do just that. We have seen a lot of progress. For several years now, PUHCA repeal opponents have claimed they would support PUHCA repeal only on the condition that certain market protections be put in place to fill the void that would be created in PUHCA's absence. Until now, those conditions have taken the form of pages of demands and long lists of unreasonable stipulations. But when I approached the cooperatives after the hearing, they took up my challenge to come to the table ready and willing to talk about serious market reforms.

The amendment that I have filed is the first step in addressing their list of significantly pared down demands. One of the handicaps first recognized in creating a PUHCA-free economy was that no one could clearly define the problems and situations that would exist once PUHCA is repealed. What is the real state of competition in the wholesale and retail electric energy markets, and what are the best remedies needed to address any failings or abuses that might be observed? The amendment, establishes a task force, made up of representatives from the current oversight agencies, and requires them to produce a report that reviews the best ways to protect competition in the wholesale and retail electric marketplace.

The remaining issues that will need to be worked out between now and the time this bill comes to the floor include agency oversight of mergers and acquisitions, generation asset sales, and the authority of the Federal Energy Regulatory Commission to require structural remedies in the case of anti-competitive and unfair conditions in electric markets.

We have a lot of work to do before these issues are resolved, but I know that PUHCA repeal will not be possible without addressing these issues in one way or another.

I have committed to provide a good faith effort to address these concerns in order to ensure final repeal of the 1935 PUHCA statute.

I, therefore, strongly encourage both sides of this issue to stay at the table and to continue to work with me to resolve the great but important obstacles that face PUHCA repeal.