FERC Chairman Joseph T. Kelliher, who was tapped as agency head by President Bush more than three years ago, announced Wednesday that he will step down as chairman effective Jan. 20, the day the government reverts to Democratic leadership, but he will continue to serve as a commissioner while he pursues job opportunities outside of the Commission.

“Although my term as commissioner does not end until 2012, I will…immediately begin to recuse myself from FERC business as I explore other career opportunities,” Kelliher said. He will recuse himself from any proceedings that involve companies where he has interviewed, said FERC spokeswoman Mary O’Driscoll, but she could not say how long Kelliher will stay on at the Commission. Kelliher notified Bush of his decision by letter Wednesday.

“It has been an honor to serve as chairman of FERC at this particular time, with the expanded power granted the agency in the Energy Policy Act of 2005,” Kelliher said. “This law gave FERC better tools to discharge its historic missions of guarding the consumer from exploitation and promoting the development of a robust energy infrastructure, as well as giving the agency new missions on grid reliability and enforcement.”

If President-elect Obama has not selected a successor to chair the Federal Energy Regulatory Commission by Inauguration Day, either of Commissioners Jon Wellinghoff or Suedeen Kelly may be tapped as interim chairman. Both are said to be interested in replacing Kelliher full time. Senate Majority Leader Harry Reid (D-NV) has said he supports Wellinghoff, a fellow Nevadan and friend, to head FERC (see Daily GPI, Jan. 5).

But two FERC outsiders — Charles E. Box, chairman of the Illinois Commerce Commission, and John Norris, chairman of the Iowa Utilities Board — have been named as possible successors to Kelliher as well. No other possible candidates have been mentioned. Norris is a close friend of Obama, and his wife, Jackie, has been selected as incoming First Lady Michelle Obama’s chief of staff. Box, if selected, would be the first African-American to head FERC (see Daily GPI, Dec. 5, 2008; Nov. 26, 2008).

While the Commission chairman will be either a Democrat or independent, Republicans will continue to hold the majority at FERC, at least until Kelliher leaves or a sitting Republican commissioner’s term ends. Of the three Republicans on the Commission, Commissioner Philip Moeller’s term would be the first to expire in June 2010.

“I wouldn’t be surprised” if Obama picked someone from outside the agency for chairman, a Washington source said, adding that such a person was more likely to have actively supported Obama during his campaign than the sitting FERC commissioners. “By the time you win the White House, you owe a lot of favors along the way.”

Kelliher has been chairman of FERC since July 2005, after having served as commissioner since November 2003. Prior to FERC, he was a senior policy advisor at the Department of Energy.

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