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FERC Official: States and Feds Must Find Ways to Work Together

To be sure, relations between FERC and the states can get testy at times. But it would be the wrong call for FERC to give up on trying to work with the states in crafting energy policy, John Moot, general counsel at the federal agency, said last week.

"The jurisdictional responsibility of the states and the FERC are not going to go away," Moot said at an Energy Daily/Edison Electric Institute (EEI) conference held on Tuesday in Washington, DC. "We're going to have to work together to make good energy policy. And I think, in my mind, the big idea is just more discussions, more information. It doesn't have to be formal. We need to roll up our sleeves and find ways we can work together," he said.

"This is a considerable issue and it really comes down to a trust and confidence issue," said James Hoecker, a partner in the Washington, DC, office of Vinson & Elkins LLP and a former FERC chairman. "We're in a period right now where the Commission, as John said, has no choice but to work through these issues," Hoecker added.

FERC must try and "do its very best to persuade regions that RTOs -- under whatever name and whatever shape and form they are likely to take -- are a good idea; that wholesale markets can function well with transcos; that there are benefits to be had by enhancing the transmission grid under some federally prescribed planning regime. And, in the long run, there is going to be a clear division of labor of between states and FERC based on the well functioning, beneficial wholesale market," Hoecker went on to say.

Against the backdrop of this year's energy law, which gives FERC "an awful lot of additional authority," Hoecker said that "it's going to be up to FERC to work, I think, very hard to earn the confidence of the states and if they don't or if the states obstruct the evolution of competitive markets, then I think FERC has an obligation to go back to Congress and tell Congress what it believes the public interest is in terms of its ability to regulate wholesale transactions..."

Moot and Hoecker commented on joint federal-state boards. FERC recently established the framework for Congressionally-mandated regional FERC-state joint boards to study the issue of security-constrained economic dispatch for various market regions in the U.S. -- South, West, Northeast and PJM/MISO.

"I certainly think it's an opportunity and we'll have some good experience from the joint boards that we're doing to implement EPact [2005]," Moot said. "What I would say though is that any kind of cooperation is great if, because of the model of the cooperation, we spend 80% of our time talking about what we need to do and 20% or less talking about our jurisdiction.

"If we get into models where we end up talking about who has jurisdiction, we're not going to get anything done and there are some elements of the joint board process which have created that over time and if that, on a particular issue, is where we end up, then we shouldn't go there. That's why I say, sometimes informal is better because people don't have to talk about their jurisdiction. They talk about the problems they're trying to solve," Moot said.

"I think I have a more open mind about joint boards because Congress said you need to think about a joint board," said Hoecker. "I'm not sure that it isn't, independent of that little piece of the statute, a recipe for some form of gridlock."

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