Senator
U.S. Senate
Washington, D.C. 20510

RE: Oppose the energy bill and preserve PUCHA!

Dear Senator ,

I urge you to oppose the energy bill now under Conference Committee consideration. The bill fails to meet America's energy needs, does nothing to promote energy conservation or alternative energy sources, would weaken environmental protections on this country's wildest, most important natural places, and would give up to $20 billion in taxpayer subsidies and tax breaks to corporate special interests. But of all the terrible provisions in this bill that would damage our environment, our national security, and our future, perhaps the very worst is the provision to repeal the federal government’s most successful and important energy consumer and investor protection, the Public Utility Holding Company Act (PUHCA).

Passed in 1935, PUHCA is urgently needed now more than ever. Congressional backers of the Act acknowledge that electric utilities, due to the industry's unique economic characteristics and the important public interest and national security role electricity serves, require a distinctive set of rules. Prior to the law's enactment, states were left powerless by sprawling, multi-state utility holding companies. Their opaque financial statements and Enron-style abuses milked the revenues from the utility affiliates while shifting costs to the utility from unregulated activities, jacking up electric rates for consumers and temporarily inflating stock value for investors. The utilities protected their market dominance by lavishing campaign money on politicians and enveloping Congress with lobbyists. But, just as with Enron, the large utility holding companies soon collapsed under their own inflated weight: 53 utility holding companies went bankrupt from 1929 to 1936 after the banks called in their loans.

For more than 50 years, because of PUHCA's strong protections, the United States' electrical system was the envy of the industrialized world for its reliable and affordable service, and our utilities were the model of stability and profitability. When utilities made mistakes, the impact tended to be localized, and state regulators could be held accountable by the state's politicians and voters. Partial PUHCA repeals in 1992 and 1996, loosening of administrative regulations and generous interpretations by the SEC opened the door to abuse, but PUHCA still remains a bulwark against creation of unaccountable multi-state utility holding companies, and probably is what prevented Enron from owning more than one local electric utility.

This energy bill would repeal the most forward-thinking utility law the United States has ever known. This comes at a time when the promises of electric deregulation have resulted in catastrophic failures in California, Montana, New York, Pennsylvania and other states. These deregulation failures, combined with the financial collapse of dozens of electricity companies and the August 2003 Midwest and Northeast power blackout have made America's energy system no longer the model to follow. But as bad as conditions have been, without PUHCA things would have been far worse. Please reject this energy bill because PUHCA not only needs to be saved, but it needs to be strengthened and enforced.