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A comprehensive energy bill being drafted in the Senate could go to the floor without a provision repealing the Public Utility Holding Company Act, a 1935 law that restricts mergers among power utilities. “PUHCA repeal is out of the draft title,” said Angela Harper, a spokeswoman for Republicans on the Senate Natural Resources Committee. PUHCA’s repeal has long been a priority for groups who say it inhibits investment in the power sector. President Bush has called for its repeal, and the House of Representatives passed an energy bill last month that repeals PUHCA. Many in the power industry have come to view repeal as a foregone conclusion, and several recently announced power mergers seem predicated on the assumption that the law will be gone soon. “This shows the Senate is not ready to get rid of this yet,” said Tyson Slocum, energy research director for Washington-based consumer advocacy group Public Citizen. Wednesday’s development is the second blow to repeal proponents in as many weeks. On May 3, an administrative law judge attached to the Securities and Exchange Commission, which enforces PUHCA, ruled that the SEC should not have allowed the 2000 merger of American Electric Power Co. and Central & South West Corp. because the assets combined in the deal do not serve a single, contiguous market, as PUHCA requires. AEP is appealing, but if the ruling stands, PUHCA could once again pose a significant barrier to deals, making its fate in Congress all the more critical. Other deals that could hinge on PUHCA’s fate are Duke Energy Corp.’s proposed $9.1 billion takeover of Cinergy Corp. and Exelon Corp.’s $12.8 billion bid for Public Service Enterprise Group Inc. The Senate Energy and Natural Resources Committee is slated to start marking up its version of the energy bill next week. The electricity title of the bill had been expected to include PUHCA’s repeal, but committee Democrats said they were not comfortable with nullifying the law without implementing compensating consumer protections at the same time. Bill Wicker, a spokesman for New Mexico senator Jeff Bingaman, the ranking Democrat on the committee, said a number of issues in the bill still need to be resolved, including PUHCA. “This may only get worked out on the Senate floor,” said Wicker, implying that repeal has become a hot-button issue, not a closed matter. “Sen. Bingaman supports repeal, but only if there are consumer protections provided to replace what is lost. We’re pushing real hard on getting our language concerning mergers and acquisitions into the bill.” Public Citizen’s Slocum says the issue is a lot further from resolution than anti-PUHCA forces in the power industry seem to have assumed. “This is going to be a long process with lots of twists and turns,” he said. “Anything can happen at this point.” Bush has pressed aggressively to get an energy bill repealing PUHCA on his desk by Aug. 1. PUHCA was enacted to prevent financial chicanery among utility trusts, which many say helped bring on the Great Depression. Those who support repeal say it’s antiquated and merely blocks much-needed investment in the industry. Opponents of repeal, however, say the law protects investors from market manipulation and ratepayers from the higher electricity prices and poor service that could result from overly large utility owners. Copyright �2005 TDD, LLC. All rights reserved.

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