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'Ghosts of FERC Past' Recall How They Shaped the Gas, Power Markets

At FERC's 1,000th meeting Thursday, former commissioners who had a major hand in opening both the natural gas and electricity markets to competition, reminisced about how the agency has evolved from a relatively obscure regulator to one that is at the center of domestic energy delivery.

For anyone just tuning into the meeting, they would think "we're the ghosts of FERC past," said Joseph Kelliher, who was chairman of the Federal Energy Regulatory Commission from 2005 through 2008, during which he helped to implement the Energy Policy Act of 2005, which provided FERC with more authority to enforce market violations.

All of the former heads of FERC were grayer and had more wrinkles, but they still were sharp when it came to energy regulatory issues (see Daily GPI, Dec. 18). "A lot of these gray hairs are attributable to sitting around this [Commission] table," said James Hoecker, who was chairman from 1997 through 2001.

"When I came here the Commission was implementing [Order] 636 on the gas side," said Betsy Moler, former FERC chair (1993-1997). The landmark order required interstate gas pipelines to unbundle their sales services from their transportation services. Now there is "robust access" on both the natural gas and electric sides, she said, but added that "there's lots of work [still] to do."

Order 636 open pipeline transportation has been an "unqualified success," Kelliher said.

The Commission under Moler implemented Order 888 and 889, which played key roles in opening the U.S. energy market to competition by requiring owners of electric transmission facilities to make transmission services available on the open market. Moler also moved the Commission to its new headquarters in Washington, DC.

The Hoecker-led Commission implemented Order 2000 during his term, which requires public transmission utilities to engage in regional and interregional transmission planning.

The agency's responsibilities are "more intricate" now that its predecessors helped to create new gas and electric markets. "This agency looks more like the SEC [Securities and Exchange Commission]," Hoecker said. It was "wonderful being on the Commission," and now "watching it from the outside," he added.

Kelliher said the California power crisis in 2003 brought the relatively obscure agency into the "public eye." It put the "most pressure" on the Commission that it has ever been under, he said.

The first chairman of FERC, Charlie Curtis (1977-1981), was unable to attend Thursday's meeting, but by video he recalled that FERC was formed in a time of trouble in the energy markets, and that the agency opinions were often challenged in the U.S. Court of Appeals for the District of Columbia.

Over the years, the Commission's reputation in the appeals courts and in the energy markets has "radically improved," Curtis said. He offered his "best wishes for the future."

As for her biggest regret on the Commission, Moler said that it was the decision not to take electric competition all the way down to the retail level. Of course, she added, this would have resulted in disputes with the states.

For Hoecker, "I wish we had a deeper understanding of the market as it was evolving." He said, "we created markets that [were] of our own making." He conceded, though, that FERC was "flummoxed" by the Enron implosion.

FERC was formed in 1977 when Congress enacted the Department of Energy Organization Act, which reorganized the then-Federal Power Commission and expanded its responsibilities in the energy field.

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