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1 1 (January 7, 1999)

handle is hein.crs/crsahac0001 and id is 1 raw text is: Order Code RS20015 January 7, 1999 CRS Report for Congress Received through the CRS Web Electricity Restructuring Background: Public Utility Holding Company Act of 1935 (PUHCA) Amy Abel Specialist in Energy Policy Environment and Natural Resources Policy Division Summary In 1935, the Public Utilities Holding Company Act (PUHCA) was enacted to eliminate unfair practices and other abuses by electricity and natural gas holding companies by requiring federal control and regulation of interstate public utility holding companies. These abuses arose from the inability of individual states to effectively regulate the financial transactions of multistate and multi-layered utility companies that evolved in the 1910s and 1920s. PUHCA remained virtually unchanged for 50 years until the enactment of the Public Utility Regulatory Policies Act (PURPA). Enactment of PURPA and the Energy Policy Act of 1992 (EPACT) increased competition in the electric generating sector by creating new entities that generate and sell electricity at wholesale without being regulated as utilities under PUHCA. Success of these regulatory entities was made possible by new technologies, such as gas combined-cycle turbines. As a result of increasing competition in the industry, some groups are calling for additional PUHCA reform or repeal. Comprehensive legislation to restructure the electric utility industry, including PUHCA reform, was introduced in the 105th Congress, and the issue is expected to continue to be active in the 106th Congress. This report provides background information on PUHCA, including its history and impact. It also discusses how PUHCA reform fits into the current electric utility industry restructuring debate. For related information on electricity restructuring, see CRS Report RL32728, Electric Utility Regulatory Reform: Issues for the 109th Congress. Creation of the Public Utility Holding Company Act of 1935 From the very beginning of the U.S. electric power industry in the late 1800s, technology, economics, and regulations have defined the structure of the industry. At the end of the 1800s, transmission was by direct current (DC), involving large copper conductors. DC power could be transmitted economically only over short distances, requiring generation to be built close to its load. Introduction of a reliable alternating Congressional Research Service + The Library of Congress

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