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Headlines that Warren Buffet's investment firm is eyeing Pacific Gas & Electric as a potential acquisition gave impetus to a consumer bill. SB 1753 by Senator Joe Dunn (D-Santa Ana) requires the California Public Utilities Commission to submit a report to the Legislature evaluating the ramifications of the repeal of the Public Utility Holding Company Act of 1935 and development of mitigation measures. The Senate Appropriations Committee passed the bill on a 6-2 vote May 8. "The bigger issue of outside investors buying utilities is not being looked at," said Lenny Goldberg, The Utility Reform Network lobbyist. It is particularly important to address the issue following a report in the Wall Street Journal last week about Buffet's cash-flush Berkshire Hathaway firm rumored to be sniffing around PG&E, he explained. Protecting utilities' financial structure can keep billions of ratepayer dollars from being raided by a new company. Currently, if utilities are taken over by an unregulated firm, the state's $5.25 billion investment in decommissioning nuclear power plants could be snapped up and rerouted to those unregulated firms - much like what was attempted by PG&E in its initial bankruptcy plans. Ratepayer funds that have been collected for nuclear burial have no protection against acquisitions aside from some low-level federal regulatory requirements. While TURN called for passage of Dunn's bill, some had their doubts about its effectiveness. That is partly because the CPUC initiated a rulemaking last October to assess the relationship between a utility and its holding company. A vote on the rulemaking was scheduled for May 11 but was postponed. State regulators are uneasy about leaving utility merger and acquisition to federal oversight and the 2005 Energy Policy Act, which repealed PUHCA (Circuit, Jan. 13, 2006). Regulators' rulemaking is, however, considered narrower in scope than Dunn's SB 1753. The 80-year-old act limited the use of utility resources by the holding companies. The nearly year-old federal energy law gave states more authority to review holding company operations. The CPUC opposed SB 1753, calling it "unnecessary" and "premature" because of its rulemaking. "Also, it would encumber Commission resources that are needed for other legislatively mandated programs like energy efficiency, resource adequacy, demand response and the Renewable Portfolio Standards," Delaney Hunter, commission Office of Government Affairs director, stated in a May 4 memo. The bill's mandated report, due July 1, 2007, is estimated to cost about $110,000. The state's three investor-owned utilities were exempt from PUHCA when it was on the books. Two decades ago, SoCal Gas's Pacific Enterprises went into the retail drugstore and sports outfitters business. That venture turned out to be a disaster. Pacific Enterprises collapsed, "costing holding company investors billions of dollars and leaving ratepayers with much higher electric rates," noted an analysis by the Senate Energy, Utilities, and Communications Committee. With the termination of PUHCA last August by the federal Energy Policy Act, the California investor-owned utilities are now potential takeover targets.

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