Hebert Says California Has 'Grasp' on Power Crisis

Although he's "sympathetic" to the plight of electric customers in California, FERC Chairman Curt Hebert Jr. said last week he believes the Commission should stay clear of the state and let it solve its own problems --- at least for now.

"I am one who believes that when there are state problems we should let the states do what they can to resolve their conflicts. And it is my belief.[that] the worst thing we can do is get in their way," the new chairman said.

Gov. Gray Davis and the California legislature are "working hard" to resolve the market turmoil, he noted. "We have to give them the opportunity to do that.I think that they've got a grasp on the problem. I don't think they need us at this point to do anything." However, Hebert conceded that something could occur tomorrow to "change our minds."

President George W. Bush, who moved quickly last Monday to appoint Hebert as FERC chairman, also favors a state solution to the continuing power crisis in California. "President Bush has made it clear that [in] situations like California, we need to be careful" to prevent the crisis from spreading to other states, Hebert said.

Hebert made the remarks during an impromptu press briefing that was held following the Commission's regular meeting last Wednesday. He stressed that he was not advocating a more limited role for FERC towards California.

"I don't care what has to be done or what needs to be done, I [am] willing to do that if it helps the folks in California," he said. But he believes the state should be given first crack at solving its own problems.

In the meantime, "I'm not aware of anything that we're doing right here at FERC at this moment" to ease the situation in California, Hebert noted. But "I think you'll see this Commission continue to try to give guidance to California."

He said he plans to meet with Sen. Dianne Feinstein (D-CA), who has said FERC has been like an "ostrich with its head in the sand" with respect to the turmoil in the California power markets. She has openly criticized the Commission for its failure to step in and set "just and reasonable" wholesale power rates in the state despite alleged evidence of market-power abuse by suppliers.

"No one's provided me with any information" that would suggest that "illegal conduct" has occurred or is occurring in California, Hebert countered.

He also noted that Energy Secretary Spencer Abraham plans to meet with a nine western governors in Portland, OR, on Feb. 1-2 to discuss the continuing power crisis in California and the western region, as well as the issue of a regional price cap. Hebert, who is expected to attend, is opposed to price caps of any form, saying they could cause long-term damage in a number of power markets.

In other developments, Hebert said he will have three priorities as chairman: 1) getting regional transmission organizations "up and running; 2) dealing with electric and natural gas pipeline deliverability issues; and 3) hydroelectric re-licensing.

He further noted that he does not intend to "erase or do away with anything" that former Chairman James J. Hoecker did during his more than three-year tenure at the FERC helm. But "there will be some changes made" at the Commission over the next four to six months, he said, but he did not go into details.

An avowed supporter of free enterprise, Hebert refused to discuss how his approach to energy markets would differ from that of Hoecker, who stepped down on Jan. 18.

As one of his last actions, Hoecker recommended that FERC seek to enjoin the state of California from staffing the Independent System Operator (Cal-ISO), the keeper of the state's power grid, with state political appointees. But Hebert doesn't appear eager to heed the advice. "I'm not prepared to go down that road right now," he told reporters.

Lastly, Hebert said he has set up a team led by his legal advisor, Joshua Z. Rokach, to deal with the backlog of nearly 2,000 cases at the Commission. "We need to move forward" with these cases.

Susan Parker

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