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The Public Utilities Holding Company Act refuses to die. Repeal of the 70-year-old law that restricts mergers and acquisitions in the power-utility sector has been included in every energy bill for the past decade. However, the current energy measure drafted by the Senate Committee on Energy and Natural Resources does not include PUHCA repeal. At a media briefing to discuss the draft bill legislative aides to Sen. Pete Domenici, the Republican chairman of the energy committee, and Sen. Jeff Bingaman, the ranking Democrat, said a “disagreement on the merger review authority of the Federal Energy Regulatory Commission” prompted the decision to exclude PUHCA repeal from the bill. Industry sources say Republican committee members refused to agree that repeal of PUHCA should be coupled with a Democratic attempt to secure more federal oversight of utility mergers by the FERC. “[Broader] merger authority is tied to PUHCA repeal,” said Bob Simon, an aide to Sen. Bingaman, adding that a judgment has been made “for the moment” that neither PUHCA repeal nor additional authority for FERC will be included in the bill. Alex Flint, an aide to Sen. Domenici, said that comments by FERC Chairman Pat Wood III regarding the $9.1 billion proposed deal between Duke Energy Corp. and Cinergy Corp. was instrumental in the decision to pull the provision. During a speech before the Independent Power Producers of New York on Tuesday, Wood said the commission will likely require Duke to join an independent power grid operating group as a condition of its proposed acquisition of Cinergy. “Pat Wood’s remarks increased the sensitivity to broad merger review at FERC,” said Flint. He added that Wood also made comments about forcing divestitures of transmission assets, raising concerns about merger authority at FERC, especially with Sen. Richard Burr, R-N.C. Earlier this year, Burr, a member of the Senate energy panel, introduced a bill that would have stripped FERC completely of its merger review authority. The commission sees independent control of electricity transmission as critical to ensuring equal access to the grid and has used its merger authority to advance that policy. FERC will likely continue to make use of merger approvals to push utilities into regional transmission organizations, Wood reportedly said at the conference. In addition, lawmakers were also concerned about a ruling by a Securities and Exchange Commission administrative law judge this month rejecting the 2000 merger of American Electric Power Co. and Texas-based Central and South West Corp. because it did not meet PUHCA standards. Capitol Hill observers say PUHCA repeal is by no means a closed issue. They note that if the provision cannot be amended to the energy bill either in committee or on the Senate floor, they expect that the House energy bill’s repeal of the law, which does not include additional regulatory oversight for FERC, will ultimately prevail when the two chambers go to conference. Disagreements like the one over PUHCA and others related to nuclear energy are the reason the draft energy bill is to be unveiled in two portions. The first eight titles were to be made public Friday morning, and the balance of the bill will be revealed this week. Meanwhile, the energy bill could fall victim to this week’s anticipated Senate floor debate on judicial nominations. The Senate will go ahead with debate on controversial judicial nominees in advance of an expected vote on whether to eliminate the filibuster on nominations. Democrats have threatened to shut down the Senate if the GOP majority succeeds in the filibuster vote. Copyright �2005 TDD, LLC. All rights reserved.

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