EnergyBiz - November/December 2007 - (Page 80)

» LeGAL eAGLe energy Agency Sets New course inSidE FErC by dArrEll dElAMAidE the eNerGy polICy aCt of 2005, SEC, the Commodity Futures Trading Commission, the Federal Communications Commission and other federal regulators for clues about how to make rules and enforce them. It’s not an easy task, not least because recruiting top-notch investigators and litigators at government salaries can be tough. Historically, FERC has not been an agency that finds it easy to retain talent, energy executives say. “The SEC staff is much more disciplined, consistent,” says one executive whose publicly traded energy firm is regulated by both. The SEC itself had to go to Congress a few years ago for a special dispensation to pay staffers above government pay scales so that it could retain and recruit qualified personnel. But Kelliher believes FERC’s newly expanded powers will attract litigators and other experts who want to take part in wielding the agency’s new enforcement powers. “We’ll be building the precedents for the industry,” he says, “and people will want to be involved.” It’s clearly a task that Kelliher, for one, relishes. The Republican Party loyalist, who served on the BushCheney transition team in 2000, has embraced his role as regulator. “He wants to cast himself as a professional regulator, above party lines,” says an industry executive who has dealt with Kelliher. Though Kelliher’s term expired in July, he can remain active in office as long as his re-nomination is pending, through the end of next year. If there is a change of party in the White House, it’s not likely that a Democratic president would let Kelliher remain chairman even if he is confirmed for a new five-year term as commissioner. Nor is it likely that Kelliher would remain on the commission as a member if he were demoted from the chairman’s job. As with other federal agencies, political balance in FERC is anchored in law – each party must have at least two members on the five-member commission, with the chairman normally belonging to the party that occupies the White House. Along with Kelliher, current Republican members are Philip Moeller, a former lobbyist, and Marc Spitzer, a former state legislator and regulator in Arizona. The Democratic members are Suedeen Kelly, a former law professor and regulator in New Mexico, and Jon Wellinghoff, an energy lawyer. Kelliher feels that most of the work at FERC is nonpartisan in any case. He notes that of 1,400-some orders voted on during his chairmanship, only two or three dozen might have been 3–2, and if those fell along party lines it was often an accident. Joe Kelliher likes to say, marked the largest grant of regulatory power to the Federal Energy Regulatory Commission in 70 years. “It’s the single biggest grant of regulatory power since the New Deal,” Kelliher, the chairman of the FERC, says, because it gave FERC the power to impose civil penalties for infractions and also mandated the agency to monitor energy markets for price manipulation. And since the civil penalties can reach as much a $1 million a day, Kelliher reckons that FERC, theoretically at least, has the greatest penalizing power of any federal agency. This new power, and the responsibility that goes with it, has spurred the agency to restructure and expand its oversight and investigative units. “We are like the SEC in 1935,” Kelliher says, shortly after the passage of the securities legislation that gave the Wall Street watchdog real teeth. Kelliher, who became chairman of the agency NewsFlash in 2005 after serving two maryland eyes years as a member, has Carbon auCtion tried to emulate the U.S. a Maryland official has Securities and Exchange proposed auctioning Commission as he reor90 percent of the ganizes FERC to put its state’s carbon dioxide expanded powers to use. allowances to power “There’s no use reinventing plant operators in the state, according to a the wheel,” he says. FERC Dow Jones report. officials have studied the constellation energy Group and Mirant, the largest coal-fired power plant operators in the state, face tens of millions of dollars of costs under the proposal, according to the report. NewsFlash CaliFornia boosts solar Water heaters california has passed legislation providing $250 million in rebates over 10 years for solar water heaters. The rebates are to offset the cost of 200,000 new solar water heaters that cost about $5,500 each. Joe kelliher PHoto courtEsy of fErc 80 E n E rgyB i z November/December 2007 http://www.energycentral.com http://www.energycentral.com

Table of Contents Feed for the Digital Edition of EnergyBiz - November/December 2007

EnergyBiz - November/December 2007 Contents Continental Grid Vision Needed Readers’ Views and Opinions Next for National Grid Clearing the Air The Need for Nuclear Energy Trade Status Report The Innovators California On The Leading Edge FERC Sparks Change Getting Coal Right Leadership in Times of Turmoil Innovation Delivers Return A Tale of Two IPOs LNGs Bright Prospects Generation Techologies The Age of Superconductors Leaders with Vision Get Ready for Plug-in Hybrids Betting on Batteries Cost of Decarbonizing Nuclear Helmsman – A chat with Dale Klein, Chairman of the U.S. Nuclear Regulatory Commission Global Energy Snapshot; Low-Income Energy Help; IT Spending Robust; The Greening of State Regulators; Generating Support Simplifying Offshore Wind Regs Chasing Construction Costs Energy Agency Sets New Course Deregulation Means Higher Rates Go-To Staffer Nightmare in Manhatten

EnergyBiz - November/December 2007

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