Summary: GAO discussed H.R. 2994, a proposal to amend the Public Utility Holding Company Act of 1935. The act was intended to protect the public, investors, and consumers from abuses associated with public utility holding companies, and it gives the Securities and Exchange Commission (SEC) the authority to regulate such holding companies. GAO believes that regulatory gaps and problems would result from repeal of the act, including the termination of SEC authority to: (1) approve the acquisition of assets and securities by holding companies; (2) approve the issuance of securities by holding companies; and (3) review the allocation of costs between the holding company and its service company and its utility subsidiaries. Some State Government officials have expressed concern about their ability to protect ratepayers if the act is repealed and noted that regulation of interstate holding companies would be impossible. A compromise proposal to amend the act was also discussed which would change regulatory procedures, increasing the State Government role and decreasing the SEC role in regulating securities involvement and holding company acquisitions. It would also give States access to records of interstate holding companies. GAO believes that a comprehensive analysis of the proposals should be prepared before congressional action is taken with regard to the act.
