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Kelliher: FERC Would Consider Katrina-Related Cost Recovery Bids

FERC would be willing to consider requests filed at the Commission for cost recovery in the wake of Hurricane Katrina if such filings are jurisdictional to the federal agency, FERC Chairman Joseph Kelliher said last Tuesday.

"In the past, these have been matters dealt with by state regulators, but we will consider them if they're structured in a way where it would be jurisdictional to the Commission," he said in a media briefing with reporters at the Energy Daily offices in Washington, DC. "Cost recovery in the past when you've had hurricanes -- in Florida, the cost recovery has typically been a matter for the state regulator."

"I don't want to rule out the possibility that we might get a request at FERC to handle some cost recovery request," he noted. "I just don't want to rule out the possibility that it's possible a request could be structured that would be FERC jurisdictional."

"There's not a clear assessment of the total damage from the hurricane yet," Kelliher said. "But transmission facilities have been damaged. Distribution facilities have been damaged and I think there may be some damage to generation facilities as well -- and I'm just talking about electric facilities right now," he added.

Kelliher said that he's "not speculating that we actually will see filings at the Commission regarding cost recovery for Katrina. All I'm saying is if it's structured in a way that it's jurisdictional, we will act on it."

He noted that transmission facilities are jurisdictional, but typically cost recovery tied to damage to transmission facilities have been addressed through proceedings at the state level. "It is possible to structure it differently, so that it could be Commission jurisdictional. All I'm doing is leaving the door open so that if it's structured in that manner, it comes before the Commission, we would seriously consider it."

Entergy and Southern Co. -- two of the power companies hardest hit by Katrina -- have not yet indicated whether they are looking at the possibility of turning to FERC for a cost recovery bid, Kelliher said.

FERC has already taken action in response to the devastation wrought by Katrina. The FERC chairman noted that the federal agency waived standards of conduct rules, which can limit discussions between employees on the distribution side of a jurisdictional utility and generation employees.

"We didn't want those restrictions to impede recovery and restoration of electric service in the Gulf Coast area, so we waived those rules and we did it on our own motion. We didn't wait to be asked. We did it because we applied the experience in Florida. Those rules proved to be a problem in Florida when Florida suffered hurricanes and we thought it was just reasonable to apply that experience and to act independently."

Meanwhile, at a press briefing following FERC's regular open meeting on Thursday, Kelliher was asked whether gas pipelines could also turn to FERC for Katrina-related cost recovery. "A gas pipeline can always come to the Commission and propose a change in rates, so that it always available," he responded.

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