Today’s hearing attempts to cover a lot of ground concerning matters of central importance to the electric restructuring debate. Protecting consumers from the raw exercise of market power has always been a concern of the Congress, and it is an appropriate focus for the Subcommittee.

During the 1920's and ‘30's, Congress carefully studied the expansion of the utility industry and the quality of service it provided to consumers. After years of investigations, Congress enacted two statutes – the Federal Power Act and the Public Utility Holding Company Act of 1935 – to protect consumers and shareholders, and to ensure that no company could manipulate the marketplace.

The concerns Congress responded to then – affiliate abuses, self-dealing, cross-subsidization, and exploitation of captive consumers – are the same concerns we must be wary of today. In addition, in states which have opened up their retail markets, market power can be used to undermine competition, producing the worst of all worlds – unregulated markets dominated by one or more companies in a position to manipulate markets to their own advantage and to the consumer’s detriment.

At the Subcommittee’s last hearing, Chairman Hoecker of the Federal Energy Regulatory Commission suggested that, in light of changes in the marketplace, Congress needs to provide the Commission with new authorities to remedy discriminatory practices. The Administration bill contains several amendments to the Federal Power Act which are very interesting. Although I am not necessarily opposed to these, I would observe that some of the suggestions – authority to order divestiture and to mandate participation in transmission organizations – are of a profound nature. We should not enact such changes on the basis of economic theory or conjecture, but only on the basis of a thorough record clearly describing the nature and extent of market abuses, and the resulting need for such far-reaching "reforms". The Federal Power Act and PUHCA were not lightly undertaken, and any proposal to significantly amend these laws should be equally well founded.

Finally, I would like to say a few words about PUHCA. I have a passing interest in this statute, which is little understood and perhaps insufficiently appreciated. If I ran a registered holding company, I’m sure I would chafe at the Act’s restrictions – and it may be that PUHCA deserves reexamination in light of current market conditions. Congress has carefully crafted several limited exemptions from the Act in recent years, based on a thorough understanding of both the purpose and the likely effect of such changes. To date, these exemptions seem to be working well, and I am not opposed to further discussion of the Act’s role in today’s markets.

However, it is inappropriate to consider major changes to PUHCA on the basis of a hope and a prayer that competition will automatically replace its consumer protections. It is also the case that PUHCA has important implications for the securities markets and for shareholder protection, and this is proper subject for the Subcommittee on Finance and Hazardous Materials.

I commend the Chairman for beginning to address these important issues today, and look forward to the witnesses’ testimony.