[Federal Register: February 26, 2007 (Volume 72, Number 37)]
[Rules and Regulations]
[Page 8277-8278]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26fe07-8]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 365 and 366
[Docket No. RM05-32-003, Order No. 667-C]
Repeal of the Public Utility Holding Company Act of 1935 and
Enactment of the Public Utility Holding Company Act of 2005
Issued February 20, 2007.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final order; order denying rehearing.
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SUMMARY: By this order, the Federal Energy Regulatory Commission denies
rehearing of Order No. 667-B. Order No. 667-B addressed requests for
clarification and rehearing of prior orders that implemented repeal of
the Public Utility Holding Company Act of 1935 and enactment of the
Public Utility Holding Company Act of 2005.
DATES: Effective Date: This order is effective on March 28, 2007.
FOR FURTHER INFORMATION CONTACT:
Lawrence Greenfield (Legal Information), Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
6415.
Laura Wilson (Legal Information), Federal Energy Regulatory Commission,
888 First Street, NE., Washington, DC 20426, (202) 502-6128.
James Guest (Technical Information), Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, (202) 502-
6614.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G.
Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.
Subtitle F of Title XII of the Energy Policy Act of 2005 (EPAct
2005) repealed the Public Utility Holding Company Act of 1935 (PUHCA
1935) and enacted the Public Utility Holding Company Act of 2005 (PUHCA
2005).\1\ In Order No. 667, the Federal Energy Regulatory Commission
(Commission) issued regulations to implement Subtitle F.\2\ In Order
No. 667-A, the Commission denied rehearing in part and granted
rehearing in part of Order No. 667.\3\ In Order No. 667-B, the
Commission granted clarification in part, denied rehearing in part and
granted rehearing in part of Order No. 667-A.\4\ In the present order,
we deny rehearing of Order No. 667-B.
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\1\ Energy Policy Act of 2005, Pub. L. 109-58, 119 Stat. 594
(2005).
\2\ Repeal of the Public Utility Holding Company Act of 1935 and
Enactment of the Public Utility Holding Company Act of 2005, Order
No. 667, 70 FR 75592 (Dec. 20, 2005), FERC Stats. & Regs. ] 31,197
(2005).
\3\ Repeal of the Public Utility Holding Company Act of 1935 and
Enactment of the Public Utility Holding Company Act of 2005, Order
No. 667-A, 71 FR 28446 (May 16, 2006), FERC Stats. & Regs. ] 31,213
(2006).
\4\ Repeal of the Public Utility Holding Company Act of 1935 and
Enactment of the Public Utility Holding Company Act of 2005, Order
No. 667-B, 71 FR 42750 (July 28, 2006), FERC Stats. & Regs. ] 31,224
(2006).
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1. American Public Power Association together with National Rural
Electric Cooperative Association (APPA/NRECA) and Florida Municipal
Power Agency together with Seminole Electric Cooperative, Inc. (FMPA/
Seminole) raise one issue on rehearing of Order No. 667-B: whether
PUHCA 2005's accounting, record retention and reporting requirements
should apply to a holding company system whose traditional utility
operations are confined substantially to one state but that holds
significant interests in out-of-state exempt wholesale generators
(EWGs), foreign utility companies (FUCOs), and qualifying facilities
(QFs). They assert that these requirements should apply because, they
claim, regulators would not otherwise have access to relevant accounts
and records and therefore would be unable to prevent inappropriate
cross-subsidization or other misallocations of costs within the holding
company system. We deny rehearing as discussed below.
Background
2. Under the Commission's regulations under PUHCA 2005, a ``single-
state holding company system'' is eligible for waiver of the
Commission's PUHCA 2005 accounting, record retention and reporting
requirements.\5\ In Order No. 667-A, the Commission defined ``single-
state holding company system'' as a system that derives no more than 13
percent of its ``public-utility company'' revenues from outside a
single state.\6\ In Order No. 667-B, the Commission clarified that
revenues from EWGs, FUCOs or QFs do not constitute public-utility
company revenues for purposes of determining status as a single-state
holding company system.\7\ As a result, a single-state holding company
system as defined in Order Nos. 667-A and 667-B may hold interests in
EWGs, FUCOs and QFs without, by virtue of those interests, being
subject to the Commission's PUHCA 2005 accounting, record retention and
reporting requirements.
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\5\ 18 CFR 366.3(c)(1).
\6\ Order No. 667-A, FERC Stats. & Regs. ] 31,213 at P 28.
\7\ Order No. 667-B, FERC Stats. & Regs. ] 31,224 at P 20.
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3. The Commission reasoned that this approach follows the approach
taken under section 3(a) of PUHCA 1935, which exempted a holding
company from plenary oversight under PUHCA 1935 if the holding
company's traditional utility operations were largely confined to one
state.\8\ The exemption in section 3(a) reflected Congress' assessment
that other state and federal corporate and rate regulation was
sufficient to protect against abuse in those circumstances. Further,
the 13 percent standard adopted by the Commission in Order Nos. 667-A
and B to determine who qualifies for the single state holding company
waiver was the same standard applied by the SEC under PUHCA 1935, thus
resulting in no more onerous regulatory requirements than those in
place under PUHCA 1935. In Order No. 667-B, the Commission found that
other state and federal regulation continues to be sufficient to
protect against abuse, without subjecting a holding company system to
the Commission's PUHCA 2005 accounting, record retention and
[[Page 8278]]
reporting requirements due to the holding company system's ownership of
out-of-state EWGs, FUCOs and QFs.\9\
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\8\ U.S.C. 79c(a); see 15 U.S.C. 79z-5a and 79z-5b.
\9\ Order No. 667-B, FERC Stats. & Regs. ] 31,224 at P 20-22.
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Requests for Rehearing
4. APPA/NRECA and FMPA/Seminole envision a holding company system
whose traditional utility operations are confined to one state but that
has EWGs, FUCOs and QFs in multiple jurisdictions. They assert that, if
such a holding company system is not subject to the Commission's PUHCA
2005 accounting, record retention and reporting requirements,
regulators will have insufficient access to the holding company
system's accounts and records and therefore will be unable to protect
against misallocations of costs and other potential abuses within the
holding company system.
Decision
5. In adopting the SEC's 13 percent of revenue standard (and
exclusion of EWGs, FUCOs and QFs from consideration in the 13 percent
of revenue calculation) for purposes of determining who qualifies for
the single state holding company waiver of the Commission's PUHCA 2005
accounting, record retention and reporting requirements, the Commission
sought to be consistent with the general intent of Congress, in
repealing PUHCA 1935, to remove unnecessary regulatory burdens and not
to create new ones in PUHCA 2005. Furthermore, APPA/NRECA and FMPA/
Seminole have presented no convincing argument that other state and
federal regulation will be insufficient to protect against abuse in the
circumstances envisioned by APPA/NRECA and FMPA/Seminole, without
imposition of the Commission's PUHCA 2005 accounting, record retention
and reporting requirements. The Commission will still have full access
under the FPA to the accounts and records of the traditional public
utility within the holding company system (i.e., the utility with
captive customers and traditional regulated rates) and of the holding
company and any other company controlled by the holding company,
insofar as they relate to transactions with or the business of the
public utility.\10\ From those accounts and records, the Commission
will be able to discern whether the public utility is attempting to
recover, from its captive customers, costs that are properly
attributable to other businesses within the holding company system.
6. Moreover, with respect to state regulatory authority access to
books and records of holding companies and their associate and
affiliate companies, nothing in our waivers affects section 1265 of
PUHCA 2005, which expressly provides for such access.\11\ We add that
no state regulatory authority has suggested that it has insufficient
authority in the circumstances envisioned.
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\10\ 16 U.S.C. 824d-e, 825; Order No. 667, FERC Stats. & Regs. ]
31,197 at P 3-6; accord 15 U.S.C. 717c-d, 717g (identifying
Commission authority with respect to natural gas companies).
\11\ 42 U.S.C. 16453. The Federal Power Act, in particular
section 201(g), 16 U.S.C. 824(g), also grants state regulatory
authorities certain access to books and records.
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7. For these reasons, we deny rehearing.
The Commission Orders
APPA/NRECA's and FMPA/Seminole's requests for rehearing are hereby
denied.
By the Commission.
Magalie R. Salas,
Secretary.
[FR Doc. E7-3234 Filed 2-23-07; 8:45 am]
BILLING CODE 6717-01-P