Many hope the Federal Energy Regulatory Commission will look at markets more skeptically

Regulators, consumer advocates and others frustrated over the PJM-run wholesale electricity markets talk about the Federal Energy Regulatory Commission, two buzzwords from the presidential campaign come up: hope and change. They hope the commission will look more skeptically at the markets. They expect some change in how the markets are run. The five commissioners make up the only group with any authority over how a regional transmission organization such as PJM Interconnections operates.

Through the 2000s, commissioners’ close associations with Enron Corp. and disgraced executive Ken Lay tainted FERC at a time when important decisions were being made about wholesale electricity markets. Since taking office President Obama named a new chairman and appointed a new commissioner to the five-person body. While that may not result in a turnabout, it sets the stage for a commission much different from the one that plunged fearlessly into deregulation.

Lay-selected members

Wholesale electricity markets were formed during the chairmanship of Pat Wood, a Texan and close friend of disgraced Enron Corp. executive Ken Lay and then-President George W. Bush, champions of deregulation. Mr. Wood resigned in 2003 after the blackouts in the east. He was replaced by Joseph Kelliher, who is largely seen as continuing Mr. Wood’s work. Enron Corp. internal memos showed the company’s heavy lobbying during those years to impanel commissioners sympathetic to unfettered power markets. Mr. Kelliher resigned in this January.

In March, President Obama named Jon Wellinghoff, a Bush appointee and registered Independent, to the important post of FERC chairman. An energy law specialist with a passion for renewable energy and grid improvements, Mr. Wellinghoff also served as Nevada’s Consumer Advocate.

Officials from the American Public Power Association, a coalition of municipal-owned utilities and PJM critic, met Mr. Wellinghoff to discuss wholesale electricity issues. APPA president Mark Crisson described the new chairman as “open.”

“We think we can make progress with FERC in making the markets work better, but it’s too early to tell,” he said.

New face

This month, a new commissioner, John Norris, former chairman of the Iowa Utilities Board, took a seat.

Bill Smith, executive director of the Organization of MISO States Inc., knows Mr. Norris and FERC fairly well. Mr. Norris served as president of Mr. Smith’s organization. Mr. Smith worked at FERC for more than a decade.

He described Mr. Norris as a knowledgeable regulator, hard worker and a “nice guy,” but cautioned against anticipating a sea change on the commission, which he compared to a corporate board of directors.

“You have a chairman who sets the agenda and the others have their opinions and interest,” Mr. Smith said. “I don’t think much is going to change. I worked there, watching it closely and things shift relatively slowly.”

The political make-up doesn’t mean much for most issues before FERC. No more than three commissioners can be from the same political party and the breakdown now is two Democrats, two Republicans and one Independent.

“The issues before FERC are too technical to be partisan,” Mr. Smith said.

Pennsylvania Consumer Advocate Irwin “Sonny” Popowsky doesn’t expect a sea change on the commission either. Those motions that launched the RTO-run markets had broad commission majorities and deregulated wholesale markets are here to stay, he said. But the markets structure should change, he said.

“There is a need for different perspective on FERC,” he said. “This is not a question of being for markets or against markets. It’s about being for markets that work for the consumer.”

When Mr. Obama had the ability to pick another commissioner early this year, he re-appointed the Bush-picked Suedeen Kelly, a Democrat, to serve another five-year term.

By David Falchek

Contact the writer: dfachek@timesshamrock.com

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