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FERC Chairman Heading Home to Texas After Four Years at Agency's Helm

FERC Chairman Patrick Wood III, who has headed the agency since 2001, announced last Wednesday that he will leave the Commission when his term expires on June 30. He's returning to his home state of Texas, although in a press briefing with reporters Wood didn't disclose any specific plans for his next career move. Commissioner Joseph Kelliher may be selected by the Bush administration as a likely replacement for Wood, if only temporarily.

"As my term at the Federal Energy Regulatory Commission comes to an end on June 30, I wanted to thank you for the unparalleled opportunity you gave me to serve you, Texas and our nation for this past decade," Wood said in an April 5 letter to President Bush. "It has been a joy and an honor to be your point man on industry restructuring and oversight, both here and at the Public Utility Commission of Texas, and I am proud of what we accomplished to solve problems and make markets work better for customers."

In the letter to Bush, Wood said his family has enjoyed living in the Washington, DC, area, "but we look forward to returning home now that my four year commitment is fulfilled." Wood noted that he and his wife are expecting their fourth child this September and son Patrick IV is starting first grade.

At a press briefing with reporters late Wednesday afternoon, Wood disclosed that he went to the White House "shortly after the election to let them know that my plan has been to finish up in four, so that they could kind of be ready for it."

Wood's expectation is that the Bush administration will "probably have a Republican nominee to fill my seat, to go along with the Democratic nominee that I think [Senate Minority Leader Harry] Reid has put up." Last month, Reid recommended that the White House nominate a Nevadan, Jon Wellinghoff, for the open Democratic seat at FERC. Wellinghoff currently is a shareholder in the law firm of Beckley Singleton in Las Vegas, where he specializes in energy and consumer law (see NGI, March 28).

"I'm not speaking for the White House, if they're nominating Mr. Wellinghoff or not," Wood said. "I think that process is on its own track, but my expectation -- again, and I haven't discussed this part either -- but my expectation based on the past would be that those would be paired."

A reporter asked Wood whether he wanted to stay on longer at FERC and whether he was asked to stay on longer. "I did not and I was not," the chairman responded.

Wood was also asked whether, in his conversations with the White House, he recommended anyone to replace him. "I recommended a lot of good people and I'm going to let that stay at that because that was a private conversation," he responded.

He did say that he recommended as well "the three good people that I serve with. I think it would even be interesting to have Suedeen [Kelly], but I think certainly Joe [Kelliher] and Nora [Brownell] if they wanted them -- of course they're already commissioners...to actually chair the agency too, I recommended that all three of them would be very capable people."

When asked to describe what he thinks his biggest accomplishment has been while he served at FERC, Wood said that "the biggest accomplishment for me is restoring this agency's morale and sense of mission. It was really a different place than the one I left when I came back here in June of '01, for all the reasons you know with all the travails in the Western energy markets. I think honestly more than the policy issues [my biggest accomplishment was] turning this agency into something that I think a government agency should be and playing a part in getting the morale back."

Wood also highlighted FERC's infrastructure moves in the natural gas sector. "I think our pipeline infrastructure has come a long way -- particularly out of the Rockies -- and I will give a lot of the credit to the Commission before me. They made a lot of good policy decisions in the '90s that I'm getting to bear the fruits of. With every California comes a pipeline policy statement, so I guess it's an even hand of what I got dealt."

Wood said his "biggest frustration" is that he won't be around to implement electric reliability provisions. "That bill never passed," he noted, referring to pending legislation on Capitol Hill. Proposals to boost the reliability of the U.S. electrical grid have been proposed as part of comprehensive energy legislation pending in the U.S. Congress, as well as in stand-alone measures, but have yet to become law.

"I think it's, quite frankly, ridiculous" that after 50 million people lost their power in August 2003, "we haven't adopted a reliability bill in this Congress and I've heard the president say the same thing. I've even heard members of Congress say the same thing, so it's not like it's an original thought here," Wood said.

"I think that's my biggest regret -- that I wasn't here for that and won't be here for that, unless of course the bill passes next week, which I don't expect will happen."

Wood has moved on a number of fronts at FERC to bolster the country's electric reliability in the wake of the historic blackout of August 2003 that swept across parts of the U.S. and Canada. The issue clearly remains on the minds of key players at the White House as well. Just last month, President Bush said that Congress "needs to make sure that reliability on the electricity grid is mandatory, not voluntary, when it comes to our power companies" and also said that federal authorities should have the power to site new transmission lines (see NGI, March 14).

Meanwhile, the FERC chairman said that he's not sure that current language in pending comprehensive energy legislation dealing with the siting of liquefied natural gas (LNG) facilities is "helpful."

He said that the proposed legislation "has a much broader state role than currently exists today, which I think can be used to effectively veto expansion of LNG infrastructure." Lawmakers in the House of Representatives last week began marking up a comprehensive energy bill.

"The main thing we wanted -- and this is what Rep. [Lee] Terry did in his bill -- was actually say the FERC's job is exclusive. Exclusive jurisdiction over LNG permitting, which was kind of a clean, clear, crisp thing that totally addressed the California PUC litigation, but that's not in this bill. The one thing we wanted is the only thing that's not in there," Wood said.

Terry, a Republican from Nebraska, earlier this year re-introduced legislation aimed at fostering meaningful expansion of the nation's capacity to receive LNG. The bill mirrors legislation the House lawmaker introduced last May.

Terry's measure would place jurisdiction for the siting of LNG import terminals with the Federal Energy Regulatory Commission, ending existing jurisdictional conflicts. It also would do the following: make FERC the lead agency for carrying out environmental reviews of LNG projects; clarify the role of states in the siting, construction, expansion or operation of LNG import terminals; set a deadline of one year for review of LNG terminal applications; allow FERC to set a schedule for completion of all federal and state administrative proceedings related to an LNG project; and codify a FERC ruling exempting LNG terminals from the agency's open-access requirements.

The California PUC (CPUC) has challenged FERC's LNG-related jurisdiction in the courts. "Just in case we don't win that case, we would want to have something that reverses a potential decision," Wood said last week. "It's hard to do. Legislators aren't real keen on trying to guess what a court case is going to do until after it's played its course. I understand that. I've certainly been on the other side of that argument."

In an appearance before NGI's 19th annual GasMart conference in New Orleans last month, Commissioner Kelliher said that the "biggest threat" to the development of new LNG import terminals in the U.S. is the CPUC's challenge to FERC's jurisdiction in this area (see NGI, March 21).

Over recent months there had been speculation as to whether Wood, an appointee of President Bush who became commissioner and chairman in June 2001, would seek a new term. Until last week, Wood had declined to say what his plans were.

Speculation surrounding Wood's situation increased last week when an Ohio senator called on the Bush administration to appoint a Republican member of the Public Utilities Commission of Ohio (PUCO) to sit on the Federal Energy Regulatory Commission. For Donald Mason, a member of the PUCO for the past seven years, to be considered for the Commission one of the current Republican commissioners would have to leave, conforming to the rule that no more than three commissioners can be from a single political party. The announcement increased the pressure for Wood to disclose his plans.

While Wood said he had no desire to stay at FERC beyond four years, had he been re-nominated by the White House, it's not clear whether he could have been confirmed by the U.S. Senate, where companies rigorously opposed to FERC's push to form regional electric grids lobbied heavily against him. "There simply is no way Pat Wood would be re-confirmed" for another term at FERC, a Washington legislative expert said in November of last year (see NGI, Nov. 8, 2004).

At the time, the expert said that it was no secret that Wood was "extremely unpopular" on Capitol Hill, particularly among Southern and Northwestern Republican senators, because of his regional transmission organization (RTO) policies.

Wood moved into the chairman's post at FERC after serving since 1995 on the Public Utility Commission of Texas. He also had been picked by then-Gov. Bush for the Texas post.

When asked by NGI whether he has ever given any thought to possibly running for political office -- specifically, governor of Texas, Wood said, "Every little boy dreams of being governor of Texas, I think." At the same time, Wood noted that he "doesn't like to raise money for anything other than about the March of Dimes or some Catholic charity." He added, "You'll probably see me again, but I'm not sure where."

One source believes Commissioner Kelliher "at least at the start would be considered the most likely" successor to Wood as chairman. But he acknowledged the White House may pick "someone not on the Commission" for the position.

Several energy sector participants were quick to praise Wood's years of service at FERC. "Chairman Wood recognized early on the significant benefits that would accrue to consumers if wholesale power markets were encouraged to evolve and mature," said Electric Power Supply Association (EPSA) President Lynne Church. "As FERC Chair, he turned this recognition into reality."

Church noted that Wood can take credit for many commission policy initiatives that provided wholesale transmission customers greater access to the lowest-cost supplies available in a given region. Among them were orders on development of organized regional power markets, refinement of existing market rules and protocols, market power mitigation, continued emphasis on open access and service comparability, state collaboration through the regional state committee concept, and a greater emphasis on reliability and market integration as a result of the Commission's lead role in the aftermath of the 2003 blackout.

"EPSA considers Pat Wood's vision on competitive power markets to be just what consumers needed in today's world of competitive energy," Church said.

"Pat Wood's announcement that he is leaving FERC, while not unexpected, is greeted with regret by those who have shared his overall objective of more competitive electricity markets," said John Anderson, president of the Electricity Consumers Resource Council.

"Pat Wood demonstrated in Texas, and he re-demonstrated in Washington, that he views electricity markets from the perspective of consumers," said Anderson. "He believes as we do that competition can -- and eventually will -- provide consumers with lower electricity prices and better services. We wish Pat well in all future endeavors."

At the CPUC's bi-weekly business meeting last week, the CPUC's senior member in terms of years of service, Geoffrey Brown, went out of his way to laud Wood.

"I am sorry to hear that Pat Wood is leaving; I think he did an awful lot to improve FERC's relationship with our state," Brown said. "We might have disagreed with him on particular issues, but he really reached out. Considering where FERC was before he got there, I think the organization improved its market surveillance and it improved its relationships with other governmental agencies. Pat will he missed."

Wood served as a FERC staffer in 1991-93 and was legal counsel to the chairman of the Texas Railroad Commission. Additionally, he was an engineer with Arco Indonesia and an attorney with the law firm of Baker & Botts in Washington, DC. He is a graduate of Texas A&M University and Harvard Law School and a native of Port Arthur, Texas.

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