Sept. 1, 2004
At Glacial Pace, SEC Finally Acts on Record-Setting Utility Merger
Statement of Lynn Hargis, Attorney, Public Citizen’s Critical Mass Energy and Environment Program
More than two years after the U.S. Court of Appeals for the District of Columbia Circuit instructed the U.S. Securities and Exchange Commission (SEC) to act, the agency has finally set for rehearing the question of whether the largest, most geographically disconnected electric utility merger in U.S. history – between American Electric Power, and Central and South West Corporation – complies with the geographic integration requirements of the Public Utility Holding Company Act (PUHCA).
U.S. Reps. John Dingell (D-Mich.) and Edward Markey (D-Mass.) are largely to thank for pressuring the SEC over its lackadaisical failure to act on the court’s remand. On Jan. 18, 2002, the Court of Appeals sent the case back to the SEC because the agency failed to justify its approval of the merger under PUHCA standards, which protects consumers from the corporate abuse of electric utilities.
But even now, the SEC appears to be in no particular hurry, as it has given the administrative law judge in the case 300 days to have a hearing and issue a decision, which can be appealed. After that, of course, the SEC itself would have to act, within no particular time frame.
Justice delayed is justice denied, and the SEC has denied justice to the American Public Power Association, the National Rural Electric Cooperative Association and Public Citizen, all of which opposed the merger in 1999 when it was still pending (it was completed in 2000). The SEC, for no good reason, has also denied justice to the millions of electricity consumers and investors that it is supposed to protect through its administration of PUHCA. The SEC could still break up the new company, but that will be far messier than preventing the merger in the first place.
When those who are paid to enforce the laws do not do so, or do so with such delay that the effect is essentially the same, our entire nation, which is based on the rule of law, suffers. The alternative to the rule of law is the rule of whim; in this case, of the whim of the staff at the SEC.
To read Public Citizen’s original motion to intervene in the SEC case, click here.