There is no evidence to substantiate allegations that the conduct or contents of a late March conference call held by FERC Chairman Pat Wood and Commissioner Nora Brownell with Wall Street analysts touching upon power contract proceedings violated any Commission procedural rules, a report issued by the Department of Energy’s (DOE) inspector general concludes.

Under the microscope is a March 26 conference call that Wood and Brownell participated in with several financial analysts. Sens. Joseph Lieberman (D-CT) and Maria Cantwell (D-WA) asked DOE Inspector General Gregory Friedman to investigate the call, citing media reports suggesting that Wood and Brownell had discussed pending power contract cases during the call.

In an April filing at FERC, Kevin F. Cadden, director of FERC’s Office of External Affairs, confirmed that Wood and Brownell participated in the conference call, but noted that it took place after a regular meeting that day during which the agency issued several major rulings related to energy supplier activities in western markets.

“At no time did I hear the chairman or Commissioner Brownell say anything substantively different [during the conference call]” than was said at the open meeting on March 26 or at the subsequent press conference with reporters, said Cadden, who noted he was present during the conference call.

In a recent report, Friedman said that he was able to confirm that Wood and Brownell did comment on pending power contract cases during the call, but that Wood and Brownell both asserted that they only repeated comments made earlier in the day on the record at the FERC open meeting. At the meeting both commissioners indicated they were leaning toward upholding the contracts.Wood and Brownell said that the call was held as part of a larger Commission outreach strategy intended to enhance public understanding of FERC activities.

In addition, Friedman said that his office was able to identify and interview many, but not all, of the conference call participants because FERC didn’t record the identities of those present on the call. “None of the 17 Wall Street representatives we interviewed who participated stated that Chairman Wood or Commissioner Brownell explicitly indicated, during the conference call, how they intended to vote on the contract cases.”

Friedman said that the conference call was not recorded and no transcription was made. “Therefore, other than the results of our interviews and record reviews, there was no way of confirming, with certainty, the complete nature and contents of the conversation.”

The report recommended that FERC “carefully consider” whether the conduct or contents of communications such as the March 26 conference call “expose Commission decisionmaking to avoidable legal challenge or needless controversy.”

To the extent that FERC intends to continue engaging in such communications going forward, the DOE’s inspector general said the Commission should consider whether:

FERC in late June upheld the sanctity of long-term power contracts that California negotiated with suppliers during the state’s energy market meltdown in 2000 and 2001, along with contracts held by Nevada Power, Sierra Pacific and PacifiCorp (see NGI, June 30).

The challengers had argued that the contracts were “unjust and unreasonable” because of the crisis-driven high prices, but the agency said they had failed to meet the higher Mobile-Sierra doctrine that required them to show that the contracts were contrary to the public interest.

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