Exelon, Illinois Power, And Puhca

Ken Silverstein’s Utilipoint Issue Alert today discusses the proposed Exelon acquisition of Illinois Power in the context of the potential repeal of PUCHA, the Public Utility Company Holding Act of 1935. It’s a very interesting analysis. Arguments for the repeal of PUHCA may have gained footing since the August blackout, as one of the primary complaints about PUHCA is that it has driven capital away from investing in electricity infrastructure.

Written in response to unfair business practices and other abuses by the electric holding companies of that era, PUHCA in 1935 required federal control and regulation of the companies. The aim: To ensure the financial integrity of regulated operations that are responsible for delivering power to consumers. But critics say that the wall has inhibited utility holding companies from making investments that are ancillary to their core services. In last year’s failed energy bill, the Senate moved to repeal the act.

Companies like Exelon, Entergy Corp. and Dominion Resources are strong and are looking for stable companies or assets. They have the money to beef up power plants and transmission lines—investments that will require many billions. And without that capital, the risk of power shortages and reliability problems could multiply.

PUHCA repeal was one of the first topics on which I wrote, back in June 2002. The links in that archived post are all still relevant and important.