Public Utility Holding Company Act Breaks Up Utility Monopolies

President Franklin D. Roosevelt signs the Public Utility Holding Company Act (PUHCA) into law on August 26, 1935, based on the 1928-1935 Federal Trade Commission investigation of the electric industry that exposes widespread abuses by large multistate utility corporations. The Act addresses challenges posed by intricate holding company structures that make state public utility commission regulation ineffective, often leading to excessive charges passed to consumers and unreliable service. PUHCA breaks up holding companies with more than two tiers, forcing divestitures to create single integrated systems serving limited geographic areas, directly attacking concentrated corporate power in the utility sector. The law imposes stringent registration and reporting requirements on public utility holding companies, giving the SEC oversight authority over electric and gas holding companies and their financial transactions including mergers and acquisitions. The Act prevents parent companies of utilities from cheating ratepayers by charging high fees for services to affiliate utility subsidiaries and from speculating in risky businesses with ratepayers’ money. PUHCA successfully protects consumers from market manipulation, fraud, and abuse in the electricity sector for 70 years. The utility industry begins lobbying for repeal in the 1990s, with Enron’s Kenneth Lay becoming one of the leading deregulation advocates, lobbying the Clinton and Bush administrations intensely. After Enron and other energy companies spend over $50 million on lobbying campaigns, the Energy Policy Act of 2005 repeals PUHCA on August 8, 2005 (effective February 8, 2006), replacing it with minimal oversight. Critics argue the repeal, largely written by oil and gas industry lobbyists, eliminates anti-monopoly protections and unleashes energy market speculation, creating extremely large energy companies with outsized political influence, demonstrating how systematic corporate lobbying can dismantle consumer protections and enable the market manipulation and corporate fraud that PUHCA was designed to prevent.