Grid Wars

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

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 If it is repealed, those who do not live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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