The Federal Energy Regulatory Commission has been steadily moving away from light-handed regulation “to the other end of the spectrum with much heavier regulation. This is reflective of the public distrust of the energy market,” Carl Levander, vice president of NiSource’s Columbia pipelines, told attendees at the LDC Forum last week.

Levander, who directs Columbia’s regulatory and strategic initiatives, said the trend is because of the “tremendous political pressure” on FERC or anyone having to do with the energy industry. There will continue to be a push toward greater transparency in business decision-making and less discretionary areas where business can make its own decisions.

Kevin Madden, executive vice president of AGL Resources and former FERC general counsel, also commented on the government’s focus on monitoring, while ignoring the overall financial health of the industry. “Clearly, there has been no guidance from public policy makers, who are just focusing on policing efforts rather than stabilizing the market, as I think they should have. You should have policing, you should have monitoring to maintain public trust, but you have to, as a regulator, maintain the financial health of the industry.”

Madden pointed to the $170 billion of shareholders’ equity lost by 10 of the largest gas and power companies in the last 28 months. He sees continued market and financial uncertainty looming for the next 12 to 18 months.

He was critical of the Commodity Futures Trading Commission for its broad and extensive investigations. “When are they going to look at stabilizing policies going forward, rather than hindsight of what happened.”

“My fear is that we might return to the 80s and have price re-regulation,” Madden said, advising that prospective price reporting requirements are going in that direction. “Where do they stop? Is there going be cost-based regulation for natural gas? I don’t want to see re-regulation by FERC.” He suggested that the industry move on its own and establish either an SRO or some independent third party to collect prices “and do it quickly” to fend off Commission action.

About 250 attended the three-day LDC Forum in Atlanta last week, sponsored by Interchange Energy.

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