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The Senate Energy and Natural Resources Committee approved the electricity title of its comprehensive energy bill on Thursday, but reserved judgment on whether the section should include repeal of the Public Utility Holding Company Act, a 1935 law that restricts mergers and acquisitions involving power producers. Committee Chairman Pete Domenici, R-N.M., said during markup of the electricity title that he is not giving up on getting repeal of PUHCA into the bill before the committee finishes its work this week. “PUHCA is not in the [current draft] yet, but we will have a PUHCA amendment that will be clear and will be a good one,” Domenici said. “PUHCA will be before us before we are finished here.” Domenici and ranking Democrat Jeff Bingaman, also of New Mexico, have been negotiating for months on repeal of the law, which among other things mandates that merged utilities must constitute a “single integrated public-utility system” and regulates investments by utilities to protect consumers from fraud and other manipulative practices. The power industry has lobbied for years to get PUHCA repealed, saying state regulations that didn’t exist in 1935 are sufficient to protect consumers, and that PUHCA now does little but inhibit badly needed investment in the sector. President Bush is calling for its repeal. But PUHCA has acquired much greater relevance since a May 3 ruling by a Securities and Exchange Commission administrative law judge that the commission’s clearance in 2000 of the massive American Electric Power Co. merger with Central & South West Corp. violated PUHCA’s “single integrated public-utility” requirement. Another big energy deal — the proposed merger of Duke Energy Corp. and Cinergy Corp. — could also hinge on whether PUHCA is repealed, though it also needs the approval of the Federal Energy Regulatory Commission. FERC Chairman Pat Wood has indicated that the agency would require divestiture of transmission assets in that deal. In the Senate, PUHCA has become hostage to Democratic demands that in return for PUHCA repeal, the energy bill give FERC increased authority over power-utility mergers. PUHCA is enforced by the SEC. “PUHCA and merger review, which appropriately belong here [in the electricity title of the bill], are held in abeyance for consideration after we have had more time to see if we can work out the appropriate merger-protection language,” Domenici said. Without a bipartisan consensus in committee, repeal could spark heated debate on the Senate floor, where it remains unclear how fervent opposition to a Republican-favored, straight-up repeal might be. If repeal does not make it into the final Senate energy bill, it could yet emerge from House-Senate conference committee. The House recently passed an energy bill that repeals PUHCA. While proponents of repeal say PUHCA is antiquated and stifles competition and investment, consumer advocates and a number of Democratic lawmakers fear repeal would spark consolidation in the industry that could severely increase the financial risk to critical infrastructure and ultimately to consumers. Industry observers are skeptical that an energy bill will pass without PUHCA’s repeal, a staple of energy bills for the past 10 years and a priority for big investor-owned utilities. But they also note that without bipartisan support of the entire bill after conference, the Senate would be hard-pressed to get the 60 votes needed to pass the bill. The Senate Energy and Natural Resources Committee is scheduled to complete its work on the bill this week, and send it to the Senate floor in time for a summer conference with the House. The committee’s work has been limited to two hours a day due to a Senate rule invoked in response to the showdown over judicial nominees. However, committee aides have said that the schedule for the energy bill was set up under the assumption that the rule limiting committee meetings would be in effect. Copyright �2005 TDD, LLC. All rights reserved.

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