Lawmakers Call SEC on Carpet Over Utilities

The story of how regulators allowed once-safe utilities to become high-risk investments could soon be told in Washington.

By the end of this week, the Securities and Exchange Commission is expected to respond to more than 50 pointed questions from federal lawmakers about its enforcement of the Public Utility Holding Company Act of 1935. The agency has come under fire for liberally exempting companies from a regulation that industry insiders -- and even the SEC itself -- have long pushed to abolish altogether.

The law restricts geographic expansion and risky outside investments by public utility companies. But industry leaders have spent the past two decades portraying the measure as a throwback that has long outlived its usefulness, one that hinders capital investment in the utility sector. ...