
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, July 7, 1994                   TAG: 9407070146
SECTION: BUSINESS                    PAGE: B-7   EDITION: METRO 
SOURCE: By GREG EDWARDS STAFF WRITER
DATELINE:                                 LENGTH: Medium

BILL WOULD BENEFIT UTILITY CUSTOMERS

Multistate electric utilities, such as Roanoke-based Appalachian Power Co. and its parent American Electric Power Co., would not be able to pass on to customers the costs of deals they make with their own subsidiaries without first getting Federal Energy Regulatory Commission approval under terms of legislation introduced by Rep. Rick Boucher.

Boucher, D-Abingdon, said the bill is designed to correct the 1992 decision of a federal appeals court that held that the Securities Exchange Commission rather than the FERC has the sole authority to regulate transactions between utilities and their subsidiaries. The bill, introduced last month, has been assigned to the Energy and Commerce Committee, on which Boucher serves.

An AEP spokesman said the bill also has a bearing on the electric utility's interest in getting into the telecommunications business.

AEP, which has considerable fiber-optic cable linking its offices in the upper Midwest and is installing fiber in the South, has a potential interest in renting excess capacity on that system as a telecommunications provider, the spokesman said.

In the 1992 case, American Electric Power tried to pass on to its customers in the form of higher rates the "exorbitant" costs it paid for coal from its affiliate, Southern Ohio Coal Co., Boucher said. The FERC denied the request, saying AEP paid up to 94 percent more for the coal than it would have paid on the open market, he said.

In reviewing the FERC decision, the appeals court said the agency lacked the authority to review costs of goods and services between holding companies and their subsidiaries. The SEC had sole authority to regulate such transactions, the court said.

Boucher, however, said in a statement that the SEC lacks the expertise and resources to protect consumers in such transactions between affiliate companies..

The bill is co-sponsored by Rep. John Dingell, D-Mich., chairman of the House Energy and Commerce Committee.

An AEP spokesman at the company's headquarters in Columbus, Ohio, said Boucher's bill was one of many that have been introduced to reverse the court ruling and address the question of the relationship between holding companies and subsidiaries.

The various bills in Congress are just a "starting point" in a new round of public-holding-company legislation, AEP said. The spokesman said the company ultimately hopes a consensus will develop on two major issues: how subsidiary transactions should be regulated and how to let holding companies into the telecommunications business.

by CNB