Electricity Supply:

Regulation of the Changing Electric Industry Under the Public Utility Holding Company Act

T-RCED-92-2: Published: Oct 3, 1991. Publicly Released: Oct 3, 1991.

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GAO discussed the Securities and Exchange Commission's (SEC) administration of the Public Utility Holding Company Act of 1935 (PUHCA), focusing on: (1) industry changes involving electric utility holding companies; (2) the SEC regulatory response to such changes; and (3) the relationship between SEC, the Federal Energy Regulatory Commission (FERC), and states in protecting consumer and investor interests in light of those changes. GAO noted that: (1) the number of exempt electric utility holding companies has increased from 45 to 97, mainly resulting from electric utilities reorganizing and forming parent holding companies for diversification purposes; (2) the number of nonutility subsidiaries of exempt holding companies grew from 113 to 1,040, mainly concentrated in a few states and companies; (3) utility holding companies and other companies have developed independent power producers (IPP) to provide wholesale power to regulated utilities; (4) SEC has continued to rely largely on state utility commissions to regulate exempt holding companies, as provided by the act; (5) SEC has attempted to accommodate IPP development within the confines of PUHCA and facilitated IPP where the law permits; (6) SEC regulates utility acquisitions and certain securities transactions of holding companies, whereas FERC does not directly regulate utility holding companies, but reviews transactions between utilities and affiliated companies; and (7) the extent of states regulation varies in diversification activities and utility transactions involving IPP.

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