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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (97227)	4/23/2001 10:22:50 AM
From: Ilaine	Read Replies (1) \| Respond to of 436258

>>Buffett's Berkshire May Invest Billions In Utilities if a 1935 Law Is Repealed By DEVON SPURGEON Staff Reporter of THE WALL STREET JOURNAL Billionaire Warren E. Buffett says he is planning to invest more than $10 billion in utility companies through Berkshire Hathaway Inc. if Congress repeals a 66-year-old law enacted to curb abuses in the gas and electric industry and if market conditions remain desirable. The Senate Banking Committee is scheduled to vote Tuesday on whether to rescind the Public Utility Holding Company Act, or PUHCA, which places certain limits on the ownership and investment of the nation's energy companies. If passed, it is then up to Sen. Trent Lott (R., Miss.), the majority leader, to schedule a vote by the full Senate. The measure, however, would still need to clear the House and would require President Bush's signature. "Hopefully, PUHCA is in its last year of life in 2001," said Sen. Phil Gramm (R., Texas), chairman of the Senate Banking Committee, at a hearing last month. Mr. Buffett, a long-term investor who says he takes stakes only in industries he can understand, has been looking for businesses in which to invest the capital generated from his insurance holdings. "We generate lots of capital, and the electric-utility industry requires it in massive doses," Mr. Buffett said. "It is a natural business for us." Supporters of repealing the law argue that it has stifled a much-needed influx of capital into the beleaguered utility sector. In fact, Mr. Buffett spoke with legislators last year expressing his support for repeal. Unsound accounting practices and excessive debt issuance by utility holding companies led to the passage of the 1935 law. But, by the 1980s, state regulation and changes in the accounting profession have made the provisions "no longer necessary," according to Securities and Exchange Commissioner Isaac C. Hunt Jr., who testified at a committee meeting last month in favor of repealing the Depression-era measure. Opponents, however, say the repeal could hurt customers. "You can't remove PUHCA if you don't have full, open competition with greater choices for consumers," said Chris Mele, legislative director for the National Association of Regulatory Utility Commissioners in Washington. "People shouldn't be paying rates that make it a great business," Mr. Buffett said. But, he added, it should be a "reasonable business." Mr. Buffett, who runs Berkshire Hathaway, Omaha, Neb., first invested in the utility sector last year. Berkshire, along with Walter Scott Jr. and David L. Sokol, acquired MidAmerican Energy Holdings Co. for about $1.6 billion. Under PUHCA, Mr. Buffett is restricted from investing in any other utility company. Mr. Buffett's investment in MidAmerican is an example of what detractors call the "PUHCA pretzel," where holding companies contort themselves to avoid violating the ownership limits of the act. Berkshire, for instance, owns 76% of the fully diluted stock in MidAmerican but actually controls less than 10% of the voting interest in the company. Mr. Scott, a Berkshire board member and close friend of Mr. Buffett's, holds the majority of voting shares.<< interactive.wsj.com