Merger Menace: Holding Companies and Overcapitalization
States remain as powerless to control holding companies as they were
in 1935, when PUHCA was passed.
During the 1970s and 1980s, diversification swept the gas and electric utility industries. One byproduct of this craze was the formation of a large number of new public utility holding companies, exempt not only from regulation by the Securities and Exchange Commission (SEC), but from state regulation over security issues. The new generation of unregulated public utility holding companies has created a constituency for complete deregulation of the public utility holding company.
Since 1982, in every session of Congress, legislators have introduced bills seeking repeal of the Public Utility Holding Company Act of 1935 (PUHCA). Even the SEC has joined the chorus in favor of repeal. So far, Congress has only loosened some restrictions under the Energy Policy Act of 1992. In October 1995, Sen. Alfonse M. D'Amato (R-NY) sponsored a bill that would effectively repeal PUHCA one year after passage.1 Even if the bill does not become law in this session of Congress, the pressure will remain for full repeal or, as one author recently suggested, a "re-deal."2