NEW HEALTHCARE INFRASTRUCTURE WOULD SUBJUGATE AMERICANS

By Diane M. Grassi

“This is just one sliver of it, one aspect of it,” President Barack Obama quipped, upon word on August 16, 2009, that his administration is supposedly revisiting the Public Option of its proposed healthcare legislation. Indeed. For virtually missing from the nationwide dialogue on President Barack Obama’s call to reform healthcare as we know it, is any detailed discussion as to how it would essentially operate and be structured; slivers and all.

Perhaps such details have wisely remained absent, as the proposed infrastructure, as laid out primarily in the House of Representatives’ H.R. 3200, known as America’s Affordable Health Choices Act of 2009, would not only change healthcare for every American, but would reconstitute its delivery system both for the private sector as well as federal agencies, some of which have yet to be formed.

Inducing Americans into believing that of which fairy tales are made is at worse deceitful and at best disingenuous:

“But what we’ll do is, we’ll have the negotiations televised on C-SPAN, so that people can see who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies. And so, that approach, I think is what is going to allow people to stay involved in this process.”
– Presidential Candidate Barack Obama (Cluster, VA - 8/21/08)

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Unlike federal programs that may less directly impact taxpayers, an individual’s healthcare encompasses very personal and vital information that will be embedded in a complex new system utilizing multiple federal and state agencies in new and unprecedented ways. Such cannot simply be mandated by way of politics-as-usual.

No matter how badly the president and the Democratic Party apply strong-arm tactics to dictate passage of their healthcare legislation, it is such recalcitrance that flies in the face of representative government or good government, and improperly denies the American people of full disclosure on matters so vital to their personal well-being.

This series of reports will attempt to highlight those issues pertinent to Americans that are not being covered clearly, if at all, by the mainstream media nor by elected officials or lawmakers; that which depicts the elemental infrastructure for the implementation of this immense and controvertible proposed body of law.

The proposed layout of agencies or its hierarchy by the Obama administration and presently encased in H.R. 3200 and its various renditions, is draconian in nature. It would encompass up to 31 new federal programs, commissions and agencies, to be touched upon in this report.

Also, keep in mind, that all involved agencies, commissions and appointees will either have some type of systemic control of or access to Electronic Health Records (EHR), which will be a requirement for all healthcare providers and patients; that which is our most personal healthcare information. It is a mandate of the American Recovery and Reinvestment Act of 2009, (ARRA) also referenced as the stimulus package, which became law in February 2009. Such will be more fully covered in the 2nd report of this series.

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By now, in the early Obama administration, many Americans are well aware that a broad-based change in the way in which they will access medical care and its delivery system in the United States is coming and in an aggressive manner. But it also requires change in the way the federal government shall be retrofitted in order to deliver such medical care to all.

And it has been seemingly decided by lawmakers and from those on-high that key words such as expenditures, cost containment, choice and privacy rights are no longer allowed into any honest discussion. Unfortunately, the American people will witness unabated unilateral healthcare reform measures, many of which will only be realized by future dates-certain, which will be provided subsequent to such legislation becoming law.

Yet, the term reform falls far short of its intended consequence. For not only will there be an expanse of federal mandates over Americans’ personal healthcare records and data, but necessary systems required to protect such data are still being discussed as we speak, for an initial rollout as early as 2011.

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H.R. 3200, as well as its various renditions in both the U.S. Senate and the U.S. House of Representatives, all provide for the restructuring of certain agencies, new cabinet secretaries, committees, appointees and councils, as key contributors to the impending bureaucratic upheaval. To wit, reinventing Medicare and Medicaid with new conditions for each state to embody in their own statutes.

Key to the new infrastructure is the White House’s heavy-handed dominance in the ultimate plan that waits for ratification by the Congress. The conglomerate for oversight and rule making will firstly stem from hand-picked White House czars, executive branch appointees, and White House and agency committees all chosen by President Obama. Essential to note, however, is that a majority of these appointments by the White House are out of the jurisdictional oversight of the U.S. Congress, nor require confirmation by the U.S. Senate.

Thus far, both the House and the Senate Democratic majority has backed such a re-engineering plan, also considered in the interest of reform. And it will impact multi-levels of both federal and state governments’ current systems.

Wide discretion has been awarded the executive branch in the Obama administration thus far, and in this, for purposes of healthcare reform. But the White House itself is not set up to administer or oversee agencies and legislation. That is the reason the U.S. Congress exists and why cabinet level officers are picked and confirmed by the U.S. Senate. And it is these types of legal complexities and knowing exactly which body of government will be looking out for constituents’ concerns, only heightened by an issue as compelling as their own personal healthcare.

And let us not forget the admission by many lawmakers, however only recently, that they do not read proposed legislation, suffer its details nor consider the future impact it will have on the American people. And in this case, they will not even be consumers of such new healthcare legislation, as their own platinum healthcare plan remains intact.

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Most notably, the legislation will give new and unprecedented power to the U.S. Surgeon General, which historically has been a position of advocacy, as an appointee by the president, rather than one that yields administrative power over other agencies or officials. There will also be a Health Choices Committee, appointed by the president, a Health Exchange agency, and formidable roles by both the Internal Revenue Service (IRS) and the Department of the U.S. Treasury, each with new directives and capacities specific to healthcare.

In addition, Senator Jay Rockefeller (D-WV) has recently introduced legislation to expand the role of the Medicare Payment Advisory Commission, (MedPAC) for determination and implementation of Medicare reimbursement policies. All the more remarkable, at such time in our history, that Senator Rockefeller believes that “It’s time to move MedPAC into the executive branch …. Congress has proven itself to be inefficient and inconsistent in making decisions about provider reimbursement under Medicare.”

Furthermore, Rockefeller believes, “Establishing MedPAC as an independent executive branch agency – which can only change through an act of Congress – is the cornerstone of improving our delivery system reform.”

Therefore, MedPAC will solely be under the auspices of the White House through a five-member independent Medicare Advisory Council, which by mandate would produce two reports per year, establishing Medicare rates for physicians, hospitals, nursing homes and medical equipment.

MedPAC will be remodeled after the Federal Reserve Board. And the only jurisdiction the U.S. Congress would have is to block a recommendation by resolution, provided it is done within 30 days. But the greater veto power would rest with the White House. Presently, MedPAC operates in an advisory capacity only. If that does not remain the case, then MedPAC would act unilaterally without any accountability to the U.S. Congress.

Additionally, under Rockefeller’s legislation, Congress would have even less authority, requiring a 3/5 majority of both the House and the Senate prior to overturn any payment decisions recommended by MedPAC. The MedPAC Council’s priority would be to reform payment rates healthcare providers receive for services for the elderly and the disabled. Secondarily, to date, private sector insurance rates generally follow the established rates approved for Medicare for their own customers.

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A Health Choices Commissioner, also appointed by the president, would oversee a new independent agency noted as the Health Choices Administration. It would be the regulatory agency of health insurance compliance. It does not provide for a collaborative effort with the various states and their set legislation concerning healthcare and would fundamentally require them to abdicate their authority to the federal government.

The new Health Choices Administration would also control the new Health Insurance Exchange, noted in H.R. 3200, Section 201, Title II, which calls for the Congress to establish such under the power of the Health Choices Commissioner. A Health Choices Committee, also appointees of the president, would advise the Health Choices Commissioner on crucial matters such as whether to recommend, for example, expenditures for medical procedures or funding for known cures for specific diseases.

The Health Choices Commissioner must establish “standards for and accept bids from qualified health benefit plans and negotiate and enter into contracts with these qualified health benefit plans, which must offer at least 3 different levels of benefits that are statutorily required with high degree of specificity.”

The Public Option, one of the more controversial elements of the drafted legislation in both the House and the Senate at present, will be overseen by the Health and Human Services Secretary and will involve both the IRS and the Department of the Treasury taking on brand new roles.

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And central to the distribution and flow of patients’ confidential medical records will be how it will be accessed throughout the country and the federal government, as mandated in ARRA. Presently, two committees are rushing to suggest a working framework, initially, for how health information systems shall at least be certified.

The National Coordinator for Health Information Technology, David Blumenthal, also a presidential appointee, has wide and sweeping power to make such decisions on IT, along with input from Secretary of Health and Human Services (HHS) Kathleen Sebelius, concerning not only how information will be disseminated but how it will be protected when shared.

But key to centralizing the exchange of medical records is a set of criteria for myriad software applications to be used by healthcare providers. And Blumenthal expects to unveil a framework for such certification guidelines by September 30, 2009.

Importantly, certification of such applications has a direct bearing as to whether Medicare and Medicaid providers will be appropriately reimbursed, a maximum of $44,000.00, if at all, for their cash outlay costs for the required certified software, which can cost an average of $300,000.00 for a 3 physician practice. The software will also be used to receive payments from Medicare and Medicaid for services rendered.

What remains to be decided is if there will be numerous certifying agencies or an additional new oversight agency. Yet, protection of patients’ rights in light of collection and dissemination of their medical information without systems already in place to protect such data has already spurred legal action by patients’ rights advocates. They wish to legally block allocation of the $22 billion provided in ARRA for EHR development. The concern is possible violations of the Health Insurance Portability and Accountability Act (HIPAA) as well as possible violation of Federal Common Law.

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As the federal government continues to seize more power, as more and more oversight is designed to originate from the executive branch in the White House, it will but leave states left to succumb to federal authority. To wit, the Health Choices Commissioner’s authority will encumber the ability of states to rely upon their own reforms for health insurance in their local markets, as they see fit. It will not be a relationship of mutual interests but rather one of domination and control by federal statute. And if the word nationalize is offensive to some, then try on the word federalize; perhaps the more correct legal term, yet just as much of a threat to states’ sovereignty.

And finally, this initial report has been an attempt to bring some clarity to an enormous change forthcoming, not only in how healthcare will be consumed by Americans, but the extreme and unprecedented governmental changes put forth in the process and in how the federal government and the White House will conduct the peoples’ business going forward. And that sets the foundation for all aspects of the future of U.S. governance, its management, oversight, accountability and its relationship to the private sector.

Part 2 of this series shall venture into providing more detail of the proposed responsibilities or powers many these fore-mentioned agencies, commissions, appointees, councils and committees will have, or those that have at least been thus far disclosed in H.R. 3200.

And whatever you may hear or read over the next few weeks, keep in mind that you are only hearing but a very small aspect of the real facts; intentionally so.

Copyright ©2009 Diane M. GrassiContact: dgrassi@cox.net

Fallout from the Energy Policy Act of 2005 Pt. 2

Energy Department Trumps States' Rights

(Part 2 of A Series)

By Diane M. Grassi

As discussed in Fallout from the Energy Policy Act of 2005 Part I of a Series, the United States federal government is taking a more and more integral role in the distribution and transmission of electricity and in the energy sector throughout the U.S.

And such is the result of both federal regulations and laws mandating the deregulation of public utilities as well as the repeal of the Public Utilities Holding Company Act (PUHCA) of 1935, as mandated in the Energy Policy Act of 2005 (EPAct 2005). It will prove to have profound impacts on the future of not only the fiscal health of public utilities but the oversight of their maintenance and the future construction of transmission lines.

This Part II continuing report, on the exploration of EPAct 2005, will focus upon a section of the law which has not been clearly articulated for the American people by either the Department of Energy (DOE) or members of either the U.S. House of Representatives or the U.S. Senate. Yet, this complex and important body of law represents but an ad hoc and unilateral takeover of not only the direction of energy policy but the very delivery system which Americans rely upon in order to live.

EPAct 2005 sets forth specific mandates whose ramifications are unprecedented with respect to U.S. energy law, states' constitutional rights and sovereignty, as well as interstate commerce. Specifically, Section 1221 of EPAct 2005 updates Section 216 of the Federal Power Act (FPA).

It provides for, among other things, the requirement of a National Electric Transmission Congestion Study, first completed in August 2006, a year after enactment of EPAct 2005. Such a Congestion Study will then be repeated every 3 years thereafter.

And it is the National Transmission Congestion Study which paved the way for the mandated National Interest Electric Transmission Corridors (NIETC). According to Section 1221(a) of EPAct 2005 (Section 326 of FPA, 16 U.S.C. Section 824p) the Secretary of Energy may designate "any geographic area experiencing electric energy transmission capacity constraints or congestion that adversely affects consumers as a national interest electric transmission corridor."

And the DOE then proposed as a direct result of the study two transmission corridors which consist of the Mid-Atlantic Area National Corridor and the Southwest Area National Corridor. The draft NIETC was issued in April 2007 and finalized in October 2007 by the DOE.

Why you may not be aware of such transmission corridors and their intended purpose can be answered simply because the public and consumers of public utilities were given little or no notice of opportunities to weigh in and attend very limited public hearings, abruptly announced in May 2007 by the DOE to take place in the very same month. That gave little time for proper public notice for participation by residents, lawmakers, ratepayers and consumer advocates, to name but a few.

Even more disconcerting is that the DOE claims that EPAct 2005 does not require it to hold any public hearings regarding the NIETC. And in spite of over 2000 written comments and reports submitted to the DOE by state governors, U.S. state and federal elected representatives, consumer advocacy organizations, and environmental and historic preservation organizations, which all protested such corridors because of the lack of public input, the DOE would have none of it.

Instead, the DOE made no changes or acted upon any of the recommendations it received on its draft proposal by finalizing the NIETC in October 2007, as originally drafted.

In terms of the enormous implications in the construct of the Mid-Atlantic Area National Corridor, on paper at least, there now exists an exact list of those states which are encompassed by it and will be impacted in a variety of ways; legislatively, constitutionally, economically, environmentally and historically.

Following is a list of those states and counties designated in the Mid-Atlantic Area National Corridor: the entireties of New Jersey, Delaware, and Washington, D.C.; 22 of 24 counties in Maryland and all of Baltimore City, MD; 47 of 62 counties of New York; 7 of 88 counties of Ohio; 52 of 67 counties of PA; 15 of 95 counties and 7of 39 independent cities of Virginia; 42 of 55 counties of West Virginia.

By contrast, the Southwest Area National Corridor includes 7 of 58 counties of California and 3 of 15 counties of Arizona, albeit the most heavily populated areas of these states.

The NIETC lays the groundwork for transmission siting approval in the construct of High-Voltage Direct-Current (HVDC) Transmission lines above ground and throughout all NIETC designated states, and whether or not that particular state in fact has an electricity congestion problem. Initially problematic is that nearly the entirety of the U.S. power grid, as it presently exists, uses High-Voltage Alternating-Current (HVAC) Transmission lines and allows current to automatically reverse direction at regular intervals if necessary. HVDC requires an operator to reverse direction and its current flows in one direction only.

Only 2% of all electrical transmission line miles in the U.S. are presently HVDC. While the DOE insists that HVDC technology includes lower costs over long distances, in reality constructing HVDC lines costs more than construction of HVAC lines for short distances over a wide expanse of area. And according to the Government Accountability Office Report of February 1, 2008, (GAO-08-347R) with respect to HVDC, there will be "higher costs for short-distance lines due to the cost of equipment needed to convert DC into AC electricity used by residents and a lack of electricity benefits to consumers living along these lines –unless converter stations are installed at intermediate locations – because such lines are generally not connected to local electricity lines."

The rationalization for designation corridors is not to facilitate or dictate how the states' regions, transmission providers or electric utilities should meet their own energy challenges, according to the DOE. But truth be told, it is quite the opposite.

"The process is geared more toward expediting the approval and siting of transmission corridors than it is geared toward respecting states' rights about their residents' energy future and needs…and by a heavy-handed centralized one-size fits all approach..," according to Congressman Maurice Hinchey (D-NY). And it is precisely such sentiments that have been raised to the Secretary of Energy, Samuel Bodman, by both federal and state lawmakers on both sides of the aisle in all 10 states and Washington, D.C. that will be directly impacted by NIETC.

And most crucial to note, EPAct 2005 enables eminent domain law over states by the federal government on a scale unlike the U.S. has ever seen.
In its effort to modernize the transmission lines infrastructure, EPAct 2005 provides for the DOE to assign the Federal Energy Regulatory Commission (FERC) siting authority.

To review from Part I of this series, FERC is central to the regulation of energy policy both fiscally as well has been given oversight authority on the applications of new construction of transmission line sites.

Under Section 216(b) of EPAct 2005 –Back-Stop Siting Authority –FERC is given authority "to issue permits for the construction or modification of transmission facilities in a National Interest Electric Transmission Corridor if FERC finds that: (1)(A) a state in which the facilities are to be constructed is without authority to approve the siting of the facilities or to consider the interstate benefits expected to be achieved by the project; (B) the applicant for a permit is a transmitting utility that does qualify for a permit federally but does not qualify for a permit under state law because it does not serve end-use customers; or (C) the state has siting authority but (i) it has withheld approval for the later of one year after the filing of an application; or (ii) conditioned approval in such a way that the proposed construction will not significantly reduce transmission congestion or is not economically feasible."

And to add insult to injury, Section 216(e) of EPAct 2005 on Rights-of-Way, "If a permit holder cannot obtain the necessary rights-of-way for the project, the permit holder can acquire the rights-of-way through an eminent domain proceeding in the federal district court where the property is located."

And furthermore, in Section 216(f), "A right-of-way acquired in an eminent domain proceeding is a taking of private property for which the landowner must receive just compensation, which is the fair market value on the date of exercise of eminent domain."

Therefore, any fluctuation or rise in real estate property values during the course of the proceeding and including any period of time due to litigation arising from such a proceeding to the time of completion of the project, if finally approved, would not be taken into consideration.

And the compensation or fair market value of the property to its owner would be locked in by the date of the initial date of the proceeding, which could potentially be years, as in the case of Kelo v. City of New London, CT 545 U.S. 469 (2005).

Crucial in understanding the bone of contention raised primarily by the 10 states within the Mid-Atlantic Area and Southwest Area National Corridors, is that historically, federal jurisdiction of the siting of transmission lines in states has been reserved for federal lands within respective states. It has been the state utility commissions of each given state which have otherwise been the regulators of siting permits and applications.

And it is only reasonable to understand the indignation and concerns by state governors and state representatives to learn that FERC has been granted a new breadth of authority that many believe is counter-productive to the best interests of their respective states and citizens which they believe they know best.

As discussed in Part I of this series, with the repeal of the Public Utilities Holding Company Act of 1935, (PUHCA) holding companies both foreign and domestic will now be the applicants for siting permits in both the Mid-Atlantic Area and the Southwest Area National Corridors for aboveground HVDC transmission lines which will range from 150-160 feet high. That is roughly three times the height of our present HVAC lines throughout the U.S. And they will cover thousands of total miles throughout NIETC, or these 10 states and Washington, D.C.

And in what could be the first official challenge to back-stop transmission authority given FERC, as prescribed by such EPAct 2005 mandate, has been pre-filed for consultation with FERC. A Southern California Edison (SCE) application to the Arizona Corporation Commission, (ACC) the public utility commission of Arizona, was rejected in May 2007 by ACC. SCE merely wanted to run a 230-mile transmission line from Arizona to California at a cost of $242 million to Arizona ratepayers. And the benefit to Arizona? None, as it would specifically be to serve Californians and their growing energy needs.

The ACC described SCE's project as "a 230-mile extension cord" into Arizona's generation supply. And likewise in his letter to Secretary Bodman in November 2007, after the NIETC was finalized, Pennsylvania Governor Ed Rendell wrote, "These transmission lines will be on our land and depreciate our property values, but they may not offer any benefit to Pennsylvania consumers. This designation and action by the federal government is a blatant abuse of states' rights," Governor Rendell said.

Yet, this is likely just the beginning, exemplifying a dysfunctional remedy, to "fix" the U.S. power grid and growing domestic energy needs, by way of EPAct 2005. It will essentially be a power grab for power both literally and figuratively, the sights of which the U.S. has never seen.

Part III of Fallout from the Energy Policy Act of 2005, will take a look at: the various federal and state laws which the NIETC either directly or potentially violate or conflict with; proposed or pending pieces of legislation in Congress in order to amend specific sections of EPAct 2005; and the mechanisms that the DOE and FERC either already have or expect to have in place in the future in order to maintain effective oversight of such a massive body of law and its unprecedented changes in U.S. energy policy.

Copyright ©2008 Diane M. Grassi
Contact: dgrassi@cox.net

Fallout from the Energy Policy Act of 2005

By Diane M. Grassi

(Part 1 of a Series)

"Energy independence from foreign sources."

A mantra repeated over and over again by Al Gore, by the Hollywood elite and by candidates running for the 2008 Presidential nomination. But rarely is it ever pointed out how this phrase is but an oxymoron with respect to United States energy policy, which becomes ever more vulnerable, not just as the result of its failing infrastructure, but from misguided public policy decisions.

But never is the topic broached publicly in how much of the U.S. energy infrastructure and lines of transmission have been consumed by a constant stream of foreign direct investors and diversified holding companies. Also unbeknownst to most consumers is that such activity was hailed from Wall Street to Capitol Hill as the answer to resolving U.S. energy woes.

And now those very foreign investors have been granted even greater leeway as now realized by such mandates of the Energy Policy Act of 2005 (EPAct) which essentially eliminated the Public Utilities Holding Company Act (PUHCA) of 1935.

And in 2007, barely after the ink dried from EPAct 2005, the Energy Independence and Security Act (EISA) of 2007 was passed by federal lawmakers and signed into law. EISA conveniently serves to obfuscate critical issues that continue to stress the U.S. electrical power grid, its energy generation and transmission capacity. Yet, EPAct 2005 has continually escaped public scrutiny and a lack of accountability in both houses of the U.S. Congress.

But U.S. energy policy and the generation of power is a complex web of public policy, law, economics, infrastructure and ever-present globalization. So for purposes of this report, and in order to best comprehend current U.S. energy policy, it will be helpful to take stock of the more recent evolution of such and to examine its many and varied elements which have changed again post-2005.

In addition to the repeal of PUHCA 1935, EPAct 2005 amended Section 203 of the Federal Power Act (FPA) which will have an unprecedented and profound impact of its own on how future transactions in the energy industry will be handled by the federal government, impact matters of states' sovereignty and regulating costs to consumers.

For over 70 years, federal laws have played a vital and critical role in the operation, production, distribution and protection of the U.S. electrical power grid. Federal laws in concert with state laws and regulations have necessarily dictated that the power grid be shielded from market manipulation and criminal behavior.

But as the nearly 100 year old power grid has aged, facing a growing population and higher load demands for power, the industry has simultaneously become more and more deregulated by mandate.

And deregulation has led to less and less necessary preventative maintenance, upgrades in technology as well as necessary investment in research and development. And the poorly maintained grid in many of the areas of the country, predominantly the mid-Atlantic and northeast states, has but put even more stress upon its transmission lines.

The basic structure of the North American transmission system is made up of over 140 control centers and approximately 3500 utility providers covering over 200,000 miles. Utility generating plants, transmission and sub-transmission systems, distribution systems and customer loads travel over a two-part power grid; one in the east and one in the west. Texas has its own grid.

Compounding the vast network and intricacy of the grid is the interconnectivity and delivery of power that in many cases is incompatible with widely varying levels of equipment integrity, data systems and personnel training. It is the secondary system which supplies the distribution of electricity to consumers, where most of the power failures occur, and that which require time to repair.

And the network of sub-stations feeding electricity to neighborhoods, via feeders which flow to transformers, is where supposed problems arise during local outages, further exacerbated by non-maintained equipment.

But although deregulation of the utility industry began over two decades ago, it was the 1992 Energy Policy Act which changed the way electricity was sold to local consumers for the first time. Energy companies were permitted to install their own plants and sought customers throughout the country, but not necessarily in the same geographic region. Energy brokers then entered into the picture and utilized the open market to buy and sell power.

And thus began the potential unreliability of energy delivery.

Purchasing power from plants hundreds of miles away from a respective region put unprecedented burdens upon the transmission system, raising the likelihood of power failures at the local level. Most importantly, the electrical grid, as it was originally envisioned, was never designed to absorb the transmission of high voltage capacity across the continent, and especially in absence of comparable and upgraded systems in place.

Although Enron became the poster child for electrical power market manipulation, which came to light after the rolling blackouts of California in 2000 and 2001, U.S. public policy and lawmakers must be held responsible for even further erosion of federal regulations and mandates now realized in EPAct 2005.

The initial most striking change that EPAct 2005 provides is the repeal of PUHCA 1935, now amended as PUHCA 2005, and now administered by the Federal Energy Regulatory Commission (FERC). PUHCA 1935 became law after the height of the Great Depression and after the stock market crash of 1929 and was a cornerstone of President Franklin D. Roosevelt's New Deal industry legislation.

It called for the prohibition of market manipulation, specifically to prevent then super-sized utility conglomerates, to prevent mega-mergers and to prevent monopolies from overtaking geographic regions. And just as importantly, PUHCA 1935 made it unfeasible for non-energy corporations to purchase a public utility.

Such abuses led to severe problems in the electric and gas industry in the 1920's and in the 1930's when three utility holding companies owned one-half of the electric utilities in the entire U.S. Thus, the emergence and formation of the Securities Exchange Commission (SEC) in 1934, which preceded PUHCA1935, and together became essential in safe-guarding the public trust and in protecting consumers and investors alike, as PUHCA 1935 delegated multi-state utility ownership regulation to the SEC.

Fast-forward to February 8, 2006, six months to the day of the enactment of EPAct 2005, when the official repeal of PUHCA 1935 was realized. As a direct result, the SEC vacated its regulatory authority over multi-state utility ownership by holding companies and only retains the ability to protect investors, not utility consumers or to prevent mega-mergers from consolidating. And now the FERC will assume cursory merger authority over generating plants and holding companies.

The repeal of PUHCA 1935 will not only allow multi-state transactions but also mergers of distribution facilities, utilities merging with non-utility corporations, and including foreign ownership over domestic utilities.

Furthermore, oil companies may now own electricity and natural gas utilities, paving the way, yet again, for the formation of cartels. In addition, construction and infrastructure companies, especially those from abroad, are eager to partake in being afforded carte blanche in the acquisition of U.S. public utility operations.

In the post-PUHCA 1935 era, no individual state or federal agency will have the jurisdictional teeth to effectively regulate the finances of U.S. public utility assets totaling more than one trillion U.S. dollars. Nor will there be required oversight of such holding or parent companies such as investment banks from speculating and investing in far riskier businesses, with utility rate-payer revenues. - We have already seen evidence of such with the current sub-prime mortgage loan crisis.

At cost? The reliability standards of U.S. public utilities, which could have grave ramifications on U.S. national security, the U.S. economy and the well-being and safety of the American people; all with the blessings of the U.S. Department of Energy, the U.S. Congress and the global stock market.

To be continued in Part 2 of a Series. Next Up: Energy Department Uses Power to Trump States' Rights

Copyright©2008 Diane M. Grassi
Contact: dgrassi@cox.net