To provide for control and regulation of public utility holding companies, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled, that this Act may be cited as the “Public Utility Act of


SEC. 1. (a) Public utility holding companies and their subsidiary companies are
affected with a national public interest in that, among other things: (1) their securities are
widely marketed and distributed by means of the mails and instrumentalities of interstate
commerce and are sold to a large number of investors in different states; (2) their service,
sales, construction, and other contracts and arrangements are often made and performed
by means of the mails and instrumentalities of interstate commerce; (3) their subsidiary
public utility companies often sell and transport gas and electric energy by the use of
means and instrumentalities of interstate commerce; (4) their practices in respect of and
control over subsidiary companies often materially affect the interstate commerce in
which those companies engage; (5) their activities extending over many states are not
susceptible of effective control by any state and make difficult, if not impossible, effective
state regulation of public utility companies.

(b) Upon the basis of facts disclosed by the reports of the Federal Trade Commission
made pursuant to S. Res. 83 (Seventieth Congress, first session), the reports of the Committee on Interstate and Foreign Commerce, House of Representatives, made pursuant to H. Res. 59 (Seventy-second Congress, first session) and H. J. Res. 572 (Seventy-second
Congress, second session) and otherwise disclosed and ascertained, it is hereby declared
that the national public interest, the interest of investors in the securities of holding companies
and their subsidiary companies and affiliates, and the interest of consumers of
electric energy and natural and manufactured gas, are or may be adversely affected—

(1) When such investors cannot obtain the information necessary to appraise the
financial position or earning power of the issuers, because of the absence of uniform
standard accounts; when such securities are issued without the approval or consent of the
states having jurisdiction over subsidiary public utility companies; when such securities
are issued upon the basis of fictitious or unsound asset values having no fair relation to
the sums invested in or the earning capacity of the properties and upon the basis of paper
profits from intercompany transactions, or in anticipation of excessive revenues from
subsidiary public utility companies; when such securities are issued by a subsidiary
public utility company under circumstances which subject such company to the burden
of supporting an overcapitalized structure and tend to prevent voluntary rate reductions;

(2) When subsidiary public utility companies are subjected to excessive charges for
services, construction work, equipment, and materials, or enter into transactions in which
evils result from an absence of arm's length bargaining or from restraint of free and independent competition; when service, management, construction, and other contracts
involve the allocation of charges among subsidiary public utility companies in different states so as to present problems of regulation which cannot be dealt with effectively by
the states;

(3) When control of subsidiary public utility companies affects the accounting practices
and rate, dividend, and other policies of such companies so as to complicate and
obstruct state regulation of such companies, or when control of such companies is
exerted through disproportionately small investment;

(4) When the growth and extension of holding companies bears no relation to
economy of management and operation or the integration and coordination of related
operating properties; or

(5) When in any other respect there is lack of economy of management and operation
of public utility companies or lack of efficiency and adequacy of service rendered by
such companies, or lack of effective public regulation, or lack of economies in the raising
of capital.

(c) When abuses of the character above enumerated become persistent and widespread
the holding company becomes an agency which, unless regulated, is injurious to
investors, consumers, and the general public; and it is hereby declared to be the policy of
this title, in accordance with which policy all the provisions of this title shall be interpreted,
to meet the problems and eliminate the evils as enumerated in this section, connected with public utility holding companies which are engaged in interstate commerce or in activities which directly affect or burden interstate commerce; and for the purpose of effectuating such policy to compel the simplification of public utility holding company systems and the elimination there from of properties detrimental to the proper functioning of such systems, and to provide as soon as practicable for the elimination of public utility holding companies except as otherwise expressly provided in this title.