Lawmakers Call SEC on Carpet Over Utilities

Standard & Poor's has since taken a similar stand by saying that lax enforcement of PUHCA has hurt the credit quality of many utilities and that its repeal could cause even further damage to the already battered sector. In the meantime, the House Committee on Energy and Commerce -- led by ranking Democrat John Dingell of Michigan -- is harshly questioning the SEC about its PUHCA policies.

"We fear that a continuation of current commission practices will allow Enron-like accounting and corporate structures to circumvent the investor and consumer protections of PUHCA," Dingell and fellow committee member Edward Markey wrote in a lengthy April 21 letter to the SEC. "In the wake of the Enron debacle, and in the face of possible repeal of PUHCA, we cannot overstate the importance to investors and consumers of resolving these issues sooner rather than too late to forestall disaster."

Late Call

The committee is asking the SEC to explain its policies regarding PUHCA exemptions for public utilities and, more recently, nonutilities -- including investor favorite Berkshire -- that have started rushing into the industry. It has also requested a full investigation by the U.S. General Accounting Office into the SEC's administration of the law, "especially the exemption provisions that have been abused by Enron and others to the detriment of investors, ratepayers and the public interest."

A committee spokesman told TheStreet.com on Monday that it has yet to receive responses to its requests. As a matter of policy, the SEC declines to comment on congressional inquiries.

To be fair, the SEC did withdraw Enron's PUHCA exemption -- but only after the company had already gone bankrupt.

Last year, the SEC determined that Enron, as the parent of Portland Gas & Electric, was subject to federal oversight because it generated substantial revenue from electricity sales outside of PGE's home state. Congressmen Dingell and Markey quickly pounced. They questioned the SEC's past decisions and even suggested that 14 other companies -- including leveraged buyout target UniSource (UNS Quote) -- may have been improperly exempted from PUHCA as well. They pointed out that these companies, too, "appear to engage in interstate wholesale electricity sales."