Sen. Maria Cantwell (D-WA) has removed her hold on the nomination of Joseph T. Kelliher for a seat on the Federal Energy Regulatory Commission, clearing the way for the Senate to confirm both the Republican nominee and Democratic nominee Suedeen Kelly, aides said late Thursday. The Senate has not scheduled a vote on the two nominees yet.

Cantwell’s action came as Kelliher heartily endorsed the senator’s somewhat controversial proposal to ban manipulation and fraud in wholesale electricity markets. The initiative was passed by the Senate Wednesday as part of a spending bill for the Department of Agriculture and other agencies for fiscal 2004.

The senator, who has been a sharp critic of energy companies’ behavior and practices in western markets, cited excerpts from a letter written by Kelliher supporting her proposal and submitted it into the record during the Senate floor debate. A Cantwell spokeswoman was unable to say if the hold on Kelliher was lifted prior to the letter or after it.

The nomination of Kelliher, a senior policy advisor at the Department of Energy (DOE), has been at a virtual standstill since his confirmation hearing last March, when formal objections were filed by Cantwell and Sen. Ron Wyden (D-OR). Wyden removed his hold in October, noting that the Kelliher had showed a “fuller understanding” of the impact of energy market manipulation in the West.

Because the Senate wants to vote on Kelliher and Kelly together, the hold against Kelliher has delayed the Senate confirmation of Kelly, a New Mexico lawyer and former state regulator.

In his Nov. 5 letter to Cantwell, which was written at her request, Kelliher said he agreed with the senator that there was an “urgent need to proscribe manipulation of electricity markets.” There currently is “no express prohibition” against energy market manipulation and fraud in the Federal Power Act (FPA), he pointed out.

“This is a critical point. The Federal Energy Regulatory Commission only has the tools that Congress chooses to give it, and Congress has never given the Commission express authority to prohibit market manipulation. I believe the time has come for Congress to take that first step.”

The existing penalties authorized by Congress in the FPA are “unlikely to discourage criminal behavior,” Kelliher said, advocating “both higher monetary penalties and longer prison terms” for violators. In addition, “I recommend Congress grant the Commission authority to impose a lifetime ban on individuals found guilty of criminal violations of market manipulation laws,” he noted.

“That authority exists at regulatory agencies that oversee securities and commodities markets, and I see no reason why market manipulation in electricity markets should be subject to lesser sanction.”

This is not to say that FERC has no authority now to punish violations, Kelliher said. The Commission can strip public utility companies of their licenses to sell power at market-based rates if they are found to have engaged in market manipulation. “Further, I believe the Commission could prohibit manipulative practices under Section 206 of the [FPA] if it determined that such practices were inherently unjust, unreasonable, unduly discriminatory or preferential.”

But because these would likely be challenged in the courts, “it would be helpful for Congress to give the Commission clear authority to prohibit market manipulation,” the Republican FERC nominee said.

“At your request, I have reviewed your market manipulation amendment. I support the goals of your amendment and believe it would go far towards effectively prohibiting manipulation of electricity markets.” Cantwell’s measure would amend the FPA to make it illegal for a person to use any “manipulative or deceptive device or contrivance” when buying or selling electricity or transmission services.

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