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U.S. Code as of:
01/19/04
Section 79m. Service, sales, and construction contracts
(a) Contracts by holding companies
After April 1, 1936, it shall be unlawful for any registered
holding company, by use of the mails or any means or
instrumentality of interstate commerce, or otherwise, to enter into
or take any step in the performance of any service, sales, or
construction contract by which such company undertakes to perform
services or construction work for, or sell goods to, any associate
company thereof which is a public-utility or mutual service
company. This provision shall not apply to such transactions,
involving special or unusual circumstances or not in the ordinary
course of business, as the Commission by rules and regulations or
order may conditionally or unconditionally exempt as being
necessary or appropriate in the public interest or for the
protection of investors or consumers.
(b) Contracts by subsidiary or mutual service companies
After April 1, 1936, it shall be unlawful for any subsidiary
company of any registered holding company or for any mutual service
company, by use of the mails or any means or instrumentality of
interstate commerce, or otherwise, to enter into or take any step
in the performance of any service, sales, or construction contract
by which such company undertakes to perform services or
construction work for, or sell goods to, any associate company
thereof except in accordance with such terms and conditions and
subject to such limitations and prohibitions as the Commission by
rules and regulations or order shall prescribe as necessary or
appropriate in the public interest or for the protection of
investors or consumers and to insure that such contracts are
performed economically and efficiently for the benefit of such
associate companies at cost, fairly and equitably allocated among
such companies. This provision shall not apply to such transactions
as the Commission by rules and regulations or order may
conditionally or unconditionally exempt as being necessary or
appropriate in the public interest or for the protection of
investors or consumers, if such transactions (1) are with any
associate company which does not derive, directly or indirectly,
any material part of its income from sources within the United
States and which is not a public-utility company operating within
the United States, or (2) involve special or unusual circumstances
or are not in the ordinary course of business.
(c) Determination and allocation of costs; duration of contracts;
regulation by rules of Commission
The rules and regulations and orders of the Commission under this
section may prescribe, among other things, such terms and
conditions regarding the determination of costs and the allocation
thereof among specified classes of companies and for specified
classes of service, sales, and construction contracts, the duration
of such contracts, the making and keeping of accounts and
cost-accounting procedures, the filing of annual and other periodic
and special reports, the maintenance of competitive conditions, the
disclosure of interests, and similar matters, as the Commission
deems necessary or appropriate in the public interest or for the
protection of investors or consumers.
(d) Application for approval as mutual service company and nature
of business; regulation by rules of Commission
The rules and regulations and orders of the Commission under this
section shall prescribe, among other things, such terms and
conditions regarding the manner in which application may be made
for approval as a mutual service company and the granting and
continuance of such approval, the nature and enforcement of
agreements for the sharing of expenses and distributing of revenues
among member companies, and matters relating to such agreements,
the nature and types of businesses and transactions in which mutual
service companies may engage, and the manner of engaging therein,
and the relations and transactions with member companies and
affiliates, as the Commission deems necessary or appropriate in the
public interest or for the protection of investors or consumers.
The Commission shall not approve, or continue the approval of, any
company as a mutual service company unless the Commission finds
such company is so organized as to ownership, costs, revenues, and
the sharing thereof as reasonably to insure the efficient and
economical performance of service, sales, or construction contracts
by such company for member companies, at cost fairly and equitably
allocated among such member companies, at a reasonable saving to
member companies over the cost to such companies of comparable
contracts performed by independent persons. The Commission, upon
its own motion or at the request of a member company or a State
commission, may, after notice and opportunity for hearing, by order
require a reallocation or reapportionment of costs among member
companies of a mutual service company if it finds the existing
allocation inequitable and may require the elimination of a service
or services to a member company which does not bear its fair
proportion of costs or which, by reason of its size or other
circumstances, does not require such service or services. The
Commission, after notice and opportunity for hearing, by order
shall revoke, suspend, or modify the approval given any mutual
service company if it finds that such company has persistently
violated any provision of this section or any rule, regulation, or
order thereunder.
(e) Contracts by affiliate in contravention of rules and
regulations of Commission
It shall be unlawful for any affiliate of any public-utility
company engaged in interstate commerce, or of any registered
holding company or subsidiary company thereof, by use of the mails
or any means or instrumentality of interstate commerce, or
otherwise, to enter into or take any step in the performance of any
service, sales, or construction contract, by which such affiliate
undertakes to perform services or construction work for, or sell
goods to, any such company of which it is an affiliate, in
contravention of such rules and regulations or orders regarding
reports, accounts, costs, maintenance of competitive conditions,
disclosure of interest, duration of contracts, and similar matters,
as the Commission deems necessary or appropriate to prevent the
circumvention of the provisions of this chapter or the rules,
regulations, or orders thereunder.
(f) Contracts by persons engaged in performance of service, sales
and construction in contravention of rules of Commission
It shall be unlawful for any person whose principal business is
the performance of service, sales, or construction contracts for
public-utility or holding companies, by use of the mails or any
means or instrumentality of interstate commerce, to enter into or
take any step in the performance of any service, sales, or
construction contract with any public-utility company, or for any
such person, by use of the mails or any means or instrumentality of
interstate commerce, or otherwise, to enter into or take any step
in the performance of any service, sales, or construction contract
with any public-utility company engaged in interstate commerce, or
with any registered holding company or any subsidiary company of a
registered holding company, in contravention of such rules and
regulations or orders regarding reports, accounts, costs,
maintenance of competitive conditions, disclosure of interest,
duration of contracts, and similar matters as the Commission deems
necessary or appropriate in the public interest or for the
protection of investors or consumers or to prevent the
circumvention of the provisions of this chapter or the rules,
regulations, or orders thereunder.
(g) Investigations and recommendations by Commission
The Commission, in order to obtain information to serve as a
basis for recommending further legislation, shall from time to time
conduct investigations regarding the making, performance, and costs
of service, sales, and construction contracts with holding
companies and subsidiary companies thereof and with public-utility
companies, the economies resulting therefrom, and the desirability
thereof. The Commission shall report to Congress, from time to
time, the results of such investigations, together with such
recommendations for legislation as it deems advisable. On the basis
of such investigations the Commission shall classify the different
types of such contracts and the work done thereunder, and shall
make recommendations from time to time regarding the standards and
scope of such contracts in relation to public-utility companies of
different kinds and sizes and the costs incurred thereunder and
economies resulting therefrom. Such recommendations shall be made
available to State commissions, public-utility companies, and to
the public in such form and at such reasonable charge as the
Commission may prescribe.
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