NGI The Weekly Gas Market Report / NGI All News Access

Staffer: FERC 'Impotent' to Detect Market Abuse

Staffer: FERC 'Impotent' to Detect Market Abuse

In a daring move, a staff member of the Federal Energy Regulatory Commission's new office that monitors the energy markets has accused the Commission of being powerless to pinpoint and correct abuses in the electricity industry due to an absence of appropriate market data.

Via an internal memorandum on June 2, Ron Rattey, a staff member in the fledgling Office of Markets, Tariffs and Rates (OMTR), assailed the Commission for failing to gather the necessary data to shield power market participants from market-power abuses.

FERC is "impotent in our ability to monitor, foster and ensure competitive electric power markets," he boldly wrote in an e-mail, which was widely circulated among FERC staff. Rattey said the Commission was collecting a "bucket" of data from industry that wasn't very helpful in detecting market-power abuses.

He further wrote the Open Access Same-Time Information System (OASIS) was plagued with severe problems, making it nearly impossible for the Commission to spot market abuses in the transmission market. Daniel Larcamp, head of OMTR, countered that the concerns cited by Rattey were "legitimate," but he said Rattey should have vented them through more appropriate channels.

Rattey allegedly sent the 30-page memo earlier this month by internal e-mail to everyone at the Commission, including the security staff. FERC sources said Rattey's supervisor ordered him to retrieve it that same day, which he did from everyone who hadn't already opened it.

Rattey's defenders described the long-time FERC staffer as extremely knowledgeable on "these issues" and a "bulldog" for getting things done. They said he tried to draw attention to the problems through regular channels, but he was unsuccessful and sent the memo out of frustration that FERC "just doesn't have the intestinal fortitude or will to push this enough to get something useful."

Rattey hasn't been dismissed because of the explosive memo. "He's still here. But I think I did see him tied up in a meat locker" in the Commission's basement, joked the Commissioner aide who read Rattey's memo. He added that he didn't agree with Rattey's "impotent" remark, and was "shocked that it [a disagreement over data collection] actually bubbled up in that way."

The memo said FERC has been repeatedly rebuffed by various independent system operators (ISOs), regional transmission organizations (RTOs) and The North American Electric Reliability Council (NERC) in its attempt to obtain pricing and power trading information, and each time the agency backed down. Many times the Commission has either been given unusable data or has been told the data is proprietary.

Sources contend the type of transactional data FERC needs in order to make the switch from a regulator of companies to a monitor of markets is not provided in the utilities' traditional Form 1 and Form 2 submissions. So far, the Commission has not officially proposed any new forms requiring market participants to submit the necessary data, sources said.

"Right now we're still collecting the same stuff that we've always collected" from the power market, even though FERC's role is undergoing a dramatic change, noted the aide to a Commissioner. "Our data needs.....are sort of undergoing an assessment. We're trying to figure out how best to carry out our mission."

Calling FERC "impotent" is "unfair" now, the aide said, but "maybe in six or eight months it might be more fair" if the Commission hasn't made substantial changes to the type of market data it collects, he told NGI.

Part of the problem lies with the downsizing of the agency and shortage of staff, sources said, and the failure of those higher up to make it a priority. A change in information requirements likely would require a FERC rule and a vote, as well as a favorable review by the White House Office of Management and Budget. The latter could be particularly difficult to achieve during an election year.

Ellen Beswick, Susan Parker

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.