NGI The Weekly Gas Market Report
Although he’s “sympathetic” to the plight of electric customersin California, FERC Chairman Curt Hebert Jr. said last week hebelieves the Commission should stay clear of the state and let itsolve its own problems — at least for now.
“I am one who believes that when there are state problems weshould let the states do what they can to resolve their conflicts.And it is my belief.[that] the worst thing we can do is get intheir way,” the new chairman said.
Gov. Gray Davis and the California legislature are “workinghard” to resolve the market turmoil, he noted. “We have to givethem the opportunity to do that.I think that they’ve got a grasp onthe problem. I don’t think they need us at this point to doanything.” However, Hebert conceded that something could occurtomorrow to “change our minds.”
President George W. Bush, who moved quickly last Monday toappoint Hebert as FERC chairman, also favors a state solution tothe continuing power crisis in California. “President Bush has madeit clear that [in] situations like California, we need to becareful” to prevent the crisis from spreading to other states,Hebert said.
Hebert made the remarks during an impromptu press briefing thatwas held following the Commission’s regular meeting last Wednesday.He stressed that he was not advocating a more limited role for FERCtowards California.
“I don’t care what has to be done or what needs to be done, I[am] willing to do that if it helps the folks in California,” hesaid. But he believes the state should be given first crack atsolving its own problems.
In the meantime, “I’m not aware of anything that we’re doingright here at FERC at this moment” to ease the situation inCalifornia, Hebert noted. But “I think you’ll see this Commissioncontinue to try to give guidance to California.”
He said he plans to meet with Sen. Dianne Feinstein (D-CA), whohas said FERC has been like an “ostrich with its head in the sand”with respect to the turmoil in the California power markets. Shehas openly criticized the Commission for its failure to step in andset “just and reasonable” wholesale power rates in the statedespite alleged evidence of market-power abuse by suppliers.
“No one’s provided me with any information” that would suggestthat “illegal conduct” has occurred or is occurring in California,Hebert countered.
He also noted that Energy Secretary Spencer Abraham plans tomeet with a nine western governors in Portland, OR, on Feb. 1-2 todiscuss the continuing power crisis in California and the westernregion, as well as the issue of a regional price cap. Hebert, whois expected to attend, is opposed to price caps of any form, sayingthey could cause long-term damage in a number of power markets.
In other developments, Hebert said he will have three prioritiesas chairman: 1) getting regional transmission organizations “up andrunning; 2) dealing with electric and natural gas pipelinedeliverability issues; and 3) hydroelectric re-licensing.
He further noted that he does not intend to “erase or do awaywith anything” that former Chairman James J. Hoecker did during hismore than three-year tenure at the FERC helm. But “there will besome changes made” at the Commission over the next four to sixmonths, he said, but he did not go into details.
An avowed supporter of free enterprise, Hebert refused todiscuss how his approach to energy markets would differ from thatof Hoecker, who stepped down on Jan. 18.
As one of his last actions, Hoecker recommended that FERC seekto enjoin the state of California from staffing the IndependentSystem Operator (Cal-ISO), the keeper of the state’s power grid,with state political appointees. But Hebert doesn’t appear eager toheed the advice. “I’m not prepared to go down that road right now,”he told reporters.
Lastly, Hebert said he has set up a team led by his legaladvisor, Joshua Z. Rokach, to deal with the backlog of nearly 2,000cases at the Commission. “We need to move forward” with thesecases.
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