Grid Wars

Did Congress not learn anything from Enron?

| November 6, 2003

When playing the game of Monopoly, can I buy the Short Line, Park Avenue, Boardwalk, and the Electric Company? Of course I can, but luckily life does not imitate this board game . . . or does it?

Congress is debating whether to repeal the Public Utility Holding Company Act (PUHCA), which currently prohibits parent companies to subsidize unregulated business activities with profits obtained from utilities. If it is repealed, those who do not live on Park Avenue may not be able to afford to play the energy game -- or even pay their electric bill.

PUHCA, enacted in 1935, is the only law that prevents non-utility companies from owning utilities and vice-versa. It protects consumers from price gouging and the kind of nightmare California endured during last year's brownouts. In fact, all of the out-of-state electricity generators and power marketers that the Federal Energy Regulatory Commission has been investigating for market manipulation in California were exempt from PUHCA.

With the Enron debacle still fresh in the minds of most people, why is Congress about to repeal PUHCA? Many Republicans in Congress are ignoring the lessons of Enron and leaning on a 1995 Securities and Exchange Commission report that asserted, 'The conduct that gave rise to the Act has all but disappeared.'

But Lynn Hargis, an attorney with Public Citizen, points out that perhaps Congress ought to pay more attention the role the PUHCA has played in building what that same SEC report called 'a strong and vibrant utility industry.' And perhaps, we should have learned that strong enforcement of the Act is the answer to more recent problems. Indeed, in the spirit of Monopoly, perhaps more people need to 'Go to Jail.'
-- Adam Overland

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