FERC issued an order last week denying allegations that FERC Chairman Pat Wood and Commissioner Nora M. Brownell during a March conference call gave Wall Street analysts the heads up on how they intended to vote in pending cases involving manipulation of western energy markets. An agency spokesman defended the two as well.

In comments filed last Tuesday, Kevin F. Cadden, director of FERC’s Office of External Affairs, confirmed that Wood and Brownell participated in a conference call with Wall Street analysts on March 26, but he said it took place after the 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. He said the call was arranged at his direction by a member of his staff.

“I attempted to reach everyone on the conference call to ascertain if a tape of the call existed so that it could be included in the record. Unfortunately, none of the people who I spoke with taped the call,” he said.

Meanwhile, the Commission in its order directed staff to place a summary of the analyst conference call and transcript of the press briefing in the record of a contract renegotiation case, which involves Southern California Water Co. and Public Utility District No. 1 of Snohomish County, WA [EL02-28]. The information about the conference call and press briefing has been posted to FERC’s web site. The two parties had filed protests at FERC earlier this month, claiming that the briefings were prohibited off-the-record communications.

The FERC order disputed the charges, saying Wood and Brownell “did not offer any information or viewpoints that had not already been discussed at the open meeting on the record.” Nor, it added, had the Commissioners “prejudged the issues here.” It further rejected the parties’ pleas for Wood and Brownell to recuse themselves from oral arguments in the case, which were held last Wednesday.

FERC’s Cadden apparently filed his “revised” summary of the conference call after Sen. Joseph Lieberman of Connecticut, ranking Democrat on the Governmental Affairs Committee, and Sen. Maria Cantwell (D-WA) asked Department of Energy Inspector General Gregory H. Friedman to look into the matter in a letter last Tuesday.

At a minimum, the senators called on Friedman to examine a series of questions — who were the analysts that participated in the call, who at FERC set up the call, and are conference calls with select groups a routine practice at the Commission. The Commission last week released the names of about 20 analysts who were invited to participate in the conference call.

The two lawmakers cited a March 28 Wall Street Journal article, which reported that Wood and Brownell “held a password-protected conference call with a select group of Wall Street analysts” on or about March 26. FERC’s Cadden said the pass code for the call was “Cadden.”

“According to this [WSJ] report, the conference call included a discussion of several cases pending before the Commission involving the abrogation of long-term power supply contracts signed during the California energy crisis; the report further suggests that, in the course of the call, the Commissioners indicated how they expected to vote on these pending matters,” Lieberman and Cantwell said.

The conference was held at about 4:08 p.m. EST, which was after the FERC meeting and after the Commissioners had voted on several western market-related cases, according to Cadden. The agency did not rule, however, on whether to annul high-priced contracts that were negotiated during the western energy crisis. Brownell told the analysts that “while the Commission [was] still uncovering and reviewing new evidence in the contract cases, …it was her opinion…that at this point in time she was probably the most fervent in her view that what she has looked at so far would not cause her to abrogate contracts,” the FERC spokesman recalled.

The conference call could be a violation of FERC rules that bar Commissioners from engaging in off-the-record communications about contested proceedings with anyone outside of the agency, as well as other governmental regulations, Lieberman and Cantwell allege.

In addition to possibly violating ex-parte communication rules, Lieberman and Cantwell said they were “troubled” that Wood and Brownell chose to provide the information “only to a select audience of certain Wall Street analysts,” and that they may have “impermissibly prejudged the significant matters pending before them.”

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