Hebert, Breathitt Reflect On FERC Freshman Year
One of the most significant regulatory events at FERC in 1998
went by practically unnoticed: the word "proposed" was put back
into the notice of proposed rulemaking (NOPR), said Commissioner
Curt Hebert Jr. in reflecting on his first full year at the agency.
Commissioner Linda K. Breathitt, who also just ended her initial
year, agreed "proposed" took on a "stronger meaning" in a specific
NOPR last year, but she hardly found it to be precedent-setting.
"There were a lot of things that occurred last year, but I can
boil it down into one...If you look historically at what this
Commission has done, even if you go back to [Order] 636, you can
see that the NOPR was the rule" that typically was transformed into
a final edict with only minor adjustments. But all that changed in
July when FERC issued the landmark NOPR that touched off a
comprehensive review of the entire gas industry, Hebert said.
That NOPR was not viewed as pre-ordained law by the Commission,
but rather was a genuine invitation to the industry to discuss
issues critical to natural gas, he said. It sparked immediate
debate on two fronts - inter-industry and FERC, and intra-industry
- that is still ongoing and will likely consume much, if not all,
of 1999. "For the first time, we are finally making people believe
that this is a Commission that is interested in intellectuals
coming forward and giving us information to help us shape and mold
this industry...into what it can be."
Restoring the real meaning to the NOPR "is the one thing we've
done this year that affects everything. It has a huge effect on how
this industry operates...The industry can now look at a NOPR and
say 'we're going to study this NOPR and we're going to debate it
because we genuinely believe the FERC will listen and even address
our concerns.' What more could you ask for?" Hebert asked.
Breathitt agreed greater emphasis was placed on "proposed" in
the July NOPR, but she doesn't think it marked a shift in
Commission policy. Rather, the feature was accented due to the
nature of the specific proposed rulemaking. "...[W]e put something
out that was so new, and quite frankly, it didn't have a lot of
detail as to how a mandatory auction would work. It was a
theoretical piece in some regards and a thought piece in some
regards," she said. Because the NOPR was "so broad" in scope, it
elicited an unparalleled "response and thought" from the industry.
The former state regulator from Kentucky said she expects the
Commission to continue its "openness" with future NOPRs, "but it
doesn't mean that they're all going to be so broad that they'll
take [the same] amount of time" to debate. For Breathitt, the most
significant event for gas in 1998 was the mega-NOPR and notice of
inquiry (NOI) themselves and the "package" of issues they
addressed, such as lifting the price cap in the short-term market,
auctioning and negotiated terms and conditions.
Hebert was particularly pleased the mega-NOPR has prompted the
gas industry to sponsor a series of meetings in Houston to discuss
the "real" issues in a collaborative fashion.
Breathitt called this one of the "unintended consequences or
unintended benefits" of the mega-NOPR. "You have sectors of the
industry that have traditionally kept to their [own] segments" to
work out their problems. But now "they're coming together [under]
the auspices of the Natural Gas Council for what is beginning to
look like very effective sessions for coming to consensus on what
might be another way to handle the capacity release of the
short-term market," she told NGI.
Breathitt sees "quite a lot" in store for gas at FERC in 1999.
"Whereas 1998 was the year of the NOPR, 1999 may be the year of the
rulemaking." She said she expects the mega-NOPR to become a final
rule in the new year, along with NOPRs on the complaint,
certificate and ex parte processes. She noted that FERC discussions
on the landowner-notification process also will move along.
Hebert, a former state legislator and regulator from
Mississippi, was more issue-oriented in his predictions. He sees
the "real" issues continuing to be whether there will be an auction
process to address market-power concerns, negotiated terms and
conditions, the prospect of seasonal ratemaking, and "whether or
not we're going to have additional pipelines...and how hard they're
going to be to put together and make happen, and how costly that's
going to be."
New Electric Rule
He said he's particularly "excited" about FERC's direction on
electricity issues. "When I came in here, it was ISO, ISO, ISO.
Now, if you listen to what's going on the electric side, we're
talking about alternatives. We're talking about RTOs." These are
regional transmission organizations that include ISOs, transcos and
other groups that would assume the operational control of
transmission facilities from transmission-owning utilities. FERC
also is looking more at market solutions and incentives for the
power industry now, he noted.
"I think electricity will take as much of the Commission's time
in 1999 as gas will take," Breathitt said. "We're certainly looking
at another rulemaking in 1999 addressing issues that have arisen
from seeing a real competitive wholesale market in the [past] two
and a half years." Some expect the initiative to be a sort of
mid-term correction, but Breathitt doesn't see it that way. It will
be "just [a] furtherance of 888's goals."
In his first year at FERC, Hebert earned the reputation of being
something of a maverick, dissenting from the majority on a number
of occasions and going head-to-head with the senior FERC
commissioners at public meetings on a range of issues, especially
those involving the clash of federal and state jurisdictions. While
some may characterize his first year as slightly tumultuous and
rocky, Hebert doesn't see it that way.
"I didn't find [it] rocky at all...I had my eye on the ball the
entire time, just like I do today. I came in here with a purpose
and that was to do a good job. I didn't come in here to be
everybody's friend," he told NGI. Although he concedes some would
disagree with him about the "rocky" part, "I wouldn't change
anything about this last year because it was a great learning
experience for me." He said he's a "firm believer that we learn
from our mistakes, and those people who don't make mistakes aren't
really doing anything."
Breathitt admittedly had a smoother first year. "I certainly
wasn't as outspoken as Commissioner Hebert, but what I tried to do
in my first year was really delve into the process at the
Commission." She believes she's been "very effective in seeking a
middle ground, centrist approach to items. I think you'll continue
to see the same style for me" in the new year.