Within days of a Democratic senator releasing her hold on a Republican FERC nominee, the Senate on Friday voted to confirm two new commissioners to the Federal Energy Regulatory Commission. In addition, there were unconfirmed reports the White House may re-nominate sitting Commissioner William Massey to another five-year term. If so, it would be the first time since the summer of 2001 that all five seats on the Commission were filled.

Confirmed were Republican Joseph T. Kelliher, whose nomination had been pending for two years, and Democratic nominee Suedeen Kelly, who was nominated by the White House last March. Kelliher is a senior policy advisor at the Department of Energy (DOE), while Kelly is a New Mexico attorney and former state regulator. A FERC spokeswoman did not know when Kelliher and Kelly would be sworn in.

Referring to Kelliher’s two-year wait, a Senate aide noted, “He’s been like the Maytag repairman. He just didn’t have anything to do.” The Senate vote came quickly after Sen. Maria Cantwell (D-WA) removed her hold on Kelliher’s nomination. The senator had filed a formal objection to his nomination shortly after his confirmation hearing last March.

“I have long supported Joe and Sudeen’s nominations and am pleased that they now will add their experience and perspective to the important work of this Commission,” said Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the Senate Energy and Natural Resources Committee who pressured the White House to nominate Kelly.

“I am delighted that the long wait is over for him [Kelliher]. He will make an outstanding commissioner,” intoned Senate Energy Committee Chairman Pete Domenici (R-NM). Kelly will “serve the public well” also, he said, adding that she has a “solid background in law and energy.”

Massey’s office would not confirm reports about his possible renomination. He was traveling Friday and was not expected to be in his office until Monday, according to a spokesman. The White House has not made any formal announcement yet. Massey’s current term officially ended in June, and he has been serving out a grace period that ends when Congress adjourns for the year.

By confirming Kelliher and Kelly, “the Senate has taken responsible action to ensure that a quorum is maintained” at the Commission, said Skip Horvath, president of the Natural Gas Supply Association, in a prepared statement. The Commission must have at least three members to conduct business.

“We are also encouraged by reports that the remaining vacancy could possibly be filled through a White House re-nomination of Commission Bill Massey, potentially rounding out an exceptional FERC team,” the producer group said.

Once Kelliher and Kelly are on board, the Commission will be made up of three Republicans (Chairman Pat Wood, Commissioner Nora M. Brownell and Kelliher) and one Democrat (Kelly). If Massey should get a nod from the White House, there would be two Democrats.

Kelly will fill out the remaining term of former FERC Chairman Curt Hebert Jr., who left the Commission in the summer of 2001. That term would expire on June 30, 2004. Kelliher would fill the seat formerly held by Commissioner Linda K. Breathitt, who departed the agency last December. His term would run until June 30, 2007.

Cantwell’s decision to remove the hold, which led to the Senate confirmations, came as Kelliher last week heartily endorsed the senator’s somewhat controversial proposal to ban manipulation and fraud in wholesale electricity markets. The initiative was attached to a spending bill for the Department of Agriculture and other agencies for fiscal 2004, which cleared the Senate on Thursday.

The senator, who has been a sharp critic of energy companies’ behavior and practices in western markets, cited excerpts from a letter written by Kelliher supporting her proposal and submitted it into the record during the Senate floor debate. A Cantwell spokeswoman was unable to say if the hold on Kelliher was lifted prior to or after the letter.

The nomination of Kelliher had been at a virtual standstill since last March when both Cantwell and Sen. Ron Wyden (D-OR) filed objections. Wyden removed his hold on Kelliher more than a month ago, noting that he had showed a “fuller understanding” of the impact of energy market manipulation in the West.

Because the Senate wanted to vote on Kelliher and Kelly together, Cantwell’s remaining hold against Kelliher also delayed the Senate confirmation of Kelly.

In his Nov. 5 letter to Cantwell, which was written at her request, Kelliher said he agreed with the senator that there was an “urgent need to proscribe manipulation of electricity markets.” There currently is “no express prohibition” against energy market manipulation and fraud in the Federal Power Act (FPA), he pointed out.

“This is a critical point. The Federal Energy Regulatory Commission only has the tools that Congress chooses to give it, and Congress has never given the Commission express authority to prohibit market manipulation. I believe the time has come for Congress to take that first step.”

The existing penalties authorized by Congress in the FPA are “unlikely to discourage criminal behavior,” Kelliher said, advocating “both higher monetary penalties and longer prison terms” for violators. In addition, “I recommend Congress grant the Commission authority to impose a lifetime ban on individuals found guilty of criminal violations of market manipulation laws,” he noted.

“That authority exists at regulatory agencies that oversee securities and commodities markets, and I see no reason why market manipulation in electricity markets should be subject to lesser sanction.”

This is not to say that FERC has no authority now to punish violators, Kelliher said. The Commission can strip public utility companies of their licenses to sell power at market-based rates if they are found to have engaged in market manipulation. “Further, I believe the Commission could prohibit manipulative practices under Section 206 of the [FPA] if it determined that such practices were inherently unjust, unreasonable, unduly discriminatory or preferential.”

But because these would likely be challenged in the courts, “it would be helpful for Congress to give the Commission clear authority to prohibit market manipulation,” the Republican FERC nominee said.

“At your request, I have reviewed your market manipulation amendment. I support the goals of your amendment and believe it would go far towards effectively prohibiting manipulation of electricity markets.” Cantwell’s measure would amend the FPA to make it illegal for a person to use any “manipulative or deceptive device or contrivance” when buying or selling electricity or transmission services.

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