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U.S. Code as of:
01/19/04
Section 79z-5b. Treatment of foreign utilities
(a) Exemptions for foreign utility companies
(1) In general
A foreign utility company shall be exempt from all of the
provisions of this chapter, except as otherwise provided under
this section, and shall not, for any purpose under this chapter,
be deemed to be a public utility company under section 79b(a)(5)
of this title, notwithstanding that the foreign utility company
may be a subsidiary company, an affiliate, or an associate
company of a holding company or of a public utility company.
(2) State commission certification
Section (!1) (a)(1) shall not apply or be effective unless
every State commission having jurisdiction over the retail
electric or gas rates of a public utility company that is an
associate company or an affiliate of a company otherwise exempted
under section (!1) (a)(1) (other than a public utility company
that is an associate company or an affiliate of a registered
holding company) has certified to the Commission that it has the
authority and resources to protect ratepayers subject to its
jurisdiction and that it intends to exercise its authority. Such
certification, upon the filing of a notice by such State
commission, may be revised or withdrawn by the State commission
prospectively as to any future acquisition. The requirement of
State certification shall be deemed satisfied if the relevant
State commission had, prior to October 24, 1992, on the basis of
prescribed conditions of general applicability, determined that
ratepayers of a public utility company are adequately insulated
from the effects of diversification and the diversification would
not impair the ability of the State commission to regulate
effectively the operations of such company.
(3) "Foreign utility company" defined
For purposes of this section, the term "foreign utility
company" means any company that -
(A) owns or operates facilities that are not located in any
State and that are used for the generation, transmission, or
distribution of electric energy for sale or the distribution at
retail of natural or manufactured gas for heat, light, or
power, if such company -
(i) derives no part of its income, directly or indirectly,
from the generation, transmission, or distribution of
electric energy for sale or the distribution at retail of
natural or manufactured gas for heat, light, or power, within
the United States; and
(ii) neither the company nor any of its subsidiary
companies is a public utility company operating in the United
States; and
(B) provides notice to the Commission, in such form as the
Commission may prescribe, that such company is a foreign
utility company.
(b) Ownership of foreign utility companies by exempt holding
companies
Notwithstanding any provision of this chapter except as provided
under this section, a holding company that is exempt under section
79c of this title shall be permitted without condition or
limitation under the (!2) chapter to acquire and maintain an
interest in the business of one or more foreign utility companies.
(c) Registered holding companies
(1) Ownership of foreign utility companies by registered holding
companies
Notwithstanding any provision of this chapter except as
otherwise provided under this section, a registered holding
company shall be permitted as of October 24, 1992 (without the
need to apply for, or receive approval from the Commission) to
acquire and hold the securities or an interest in the business,
of one or more foreign utility companies. The Commission shall
promulgate rules or regulations regarding registered holding
companies' acquisition of interests in foreign utility companies
which shall provide for the protection of the customers of a
public utility company which is an associate company of a foreign
utility company and the maintenance of the financial integrity of
the registered holding company system.
(2) Issuance of securities
The issuance of securities by a registered holding company for
purposes of financing the acquisition of a foreign utility
company, the guarantee of securities of a foreign utility company
by a registered holding company, the entering into service,
sales, or construction contracts, and the creation or maintenance
of any other relationship between a foreign utility company and a
registered holding company, its affiliates and associate
companies, shall remain subject to the jurisdiction of the
Commission under this chapter (unless otherwise exempted under
this chapter, in the case of a transaction with an affiliate or
associate company located outside of the United States). Any
State commission with jurisdiction over the retail rates of a
public utility company which is part of a registered holding
company system may make such recommendations to the Commission
regarding the registered holding company's relationship to a
foreign utility company, and the Commission shall reasonably and
fully consider such State recommendation.
(3) Construction
Any interest in the business of 1 or more foreign utility
companies, or 1 or more companies organized exclusively to own,
directly or indirectly, the securities or other interest in a
foreign utility company, shall for all purposes of this chapter,
be considered to be -
(A) consistent with the operation of a single integrated
public utility system, within the meaning of section 79k of
this title; and
(B) reasonably incidental, or economically necessary or
appropriate, to the operations of an integrated public utility
system, within the meaning of section 79k of this title.
(d) Effect on existing law; no State preemption
Nothing in this section shall -
(1) preclude any person from qualifying for or maintaining any
exemption otherwise provided for under this chapter or the rules,
regulations, or orders promulgated or issued under this chapter;
or
(2) be deemed or construed to limit the authority of any State
(including any State regulatory authority) with respect to -
(A) any public utility company or holding company subject to
such State's jurisdiction; or
(B) any transaction between any foreign utility company (or
any affiliate or associate company thereof) and any public
utility company or holding company subject to such State's
jurisdiction.
(e) Reporting requirements
(1) Filing of reports
A public utility company that is an associate company of a
foreign utility company shall file with the Commission such
reports (with respect to such foreign utility company) as the
Commission may by rules, regulations, or order prescribe as
necessary or appropriate in the public interest or for the
protection of investors or consumers.
(2) Notice of acquisitions
Not later than 30 days after the consummation of the
acquisition of an interest in a foreign utility company by an
associate company of a public utility company that is subject to
the jurisdiction of a State commission with respect to its retail
electric or gas rates or by such public utility company, such
associate company or such public utility company, shall provide
notice of such acquisition to every State commission having
jurisdiction over the retail electric or gas rates of such public
utility company, in such form as may be prescribed by the State
commission.
(f) Prohibition on assumption of liabilities
(1) In general
No public utility company that is subject to the jurisdiction
of a State commission with respect to its retail electric or gas
rates shall issue any security for the purpose of financing the
acquisition, or for the purposes of financing the ownership or
operation, of a foreign utility company, nor shall any such
public utility company assume any obligation or liability as
guarantor, endorser, surety, or otherwise in respect of any
security of a foreign utility company.
(2) Exception for holding companies which are predominantly
public utility companies
Subsection (f)(1) of this section shall not apply if:
(A) the public utility company that is subject to the
jurisdiction of a State commission with respect to its retail
electric or gas rates is a holding company and is not an
affiliate under section 79b(a)(11)(B) of this title of another
holding company or is not subject to regulation as a holding
company and has no affiliate as defined in section
79b(a)(11)(A) of this title that is a public utility company
subject to the jurisdiction of a State commission with respect
to its retail electric or gas rates; and
(B) each State commission having jurisdiction with respect to
the retail electric and gas rates of such public utility
company expressly permits such public utility to engage in a
transaction otherwise prohibited under section (!3) (f)(1); and
(C) the transaction (aggregated with all other
then-outstanding transactions exempted under this subsection)
does not exceed 5 per centum of the then-outstanding total
capitalization of the public utility.
(g) Prohibition on pledging or encumbering utility assets
No public utility company that is subject to the jurisdiction of
a State commission with respect to its retail electric or gas rates
shall pledge or encumber any utility assets or utility assets of
any subsidiary thereof for the benefit of an associate foreign
utility company.
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