The Senate Energy and Natural Resources Committee whipped through a fast-paced hearing last Tuesday on the nomination of New Mexico’s Suedeen Kelly for commissioner of the Federal Energy Regulatory Commission, with both the chairman and ranking minority member vowing to rush through Kelly’s confirmation, along with that of Joseph T. Kelliher, whose nomination has been stalled in the Senate.

Chairman Pete Domenici, R-NM, worried that FERC is down to three commissioners, one of which is “serving on borrowed time.” Commissioner William Massey’s term has expired and he may only continue to serve while the current Congress is in session. When Congress adjourns, the normally five-member commission would be without a quorum. Domenici raised the specter of “a disabled FERC,” which in view of the August blackout is not acceptable.

Domenici and Sen. Jeff Bingaman, D-NM, agreed that the nominations of Kelly, a Democrat, and Kelliher, a Republican, should be voted on the Senate floor together. The committee confirmed Kelliher in March, but his nomination has been on hold in the full Senate since that time (see NGI, March 24). If Kelliher had been approved and Massey then left, FERC would have had three Republicans and no Democrats. Chairman Pat Wood and Commissioner Nora Brownell both are Republicans.

Bingaman said he had no objection to approval of the two new commissioners “together, as soon as possible.” The committee is expected to vote on Kelly’s nomination within the next few weeks, possibly as early as the committee’s next business meeting Sept. 17. The senator commended her “broad experience and deep understanding of utility issues.”

Kelly had been a commissioner on the New Mexico Public Utility Commission in the 1980s and as a private sector attorney has worked for all types of utilities since then. She also has taught at the University of New Mexico School of Law and served as regulatory counsel for the California ISO during the difficult 2000-2001 time period.

At the hearing, Kelly fielded several questions regarding her position on RTOs, saying she agreed that “markets are regional,” and FERC should work with the states to determine on a region by region basis the best structure for each region.” She agreed that the Commission needs a mandate to ensure reliability of the power grid and toward that same end should do all it can to “remove the roadblocks” to investment in new transmission facilities.

Kelly dodged a question from Sen. Dianne Feinstein, D-CA, about California’s claim to $8.9 billion in refunds for the power crisis three years ago, saying she looked forward to studying the case if she became a commissioner. She noted that she had served on the Cal-ISO during that period and was sympathetic to consumers who suffered rate shock from 400% increases. Kelly said she would work to “ensure that nothing remotely similar occurs again.”

Feinstein said she was coming to the conclusion that the only recourse for California was to re-regulate. She is “increasingly of the view that FERC is not going to be able to do its job.” The senator said she would be making her case in-state for re-regulation and a return to cost-based rates. She cited what she called “a lack of ethics in the entire energy trading field,” and called it a conflict of interest that FERC’s activities are underwritten through fees by the companies it regulates. “We need to take another course in California.”

If confirmed by the Senate, Kelly would 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 is seeking the seat formerly held by Commissioner Linda K. Breathitt, who departed the agency in December. His term would run until June 30, 2007.

The Senate committee also reviewed the nomination of Rick A. Dearborn, of Oklahoma, to be Assistant Secretary of Energy for Congressional and Intergovernmental Affairs for the Department of Energy. Dearborn has served on the staffs of 10 senators over the last six years, most recently for Sen. Jeff Sessions, R-AL.

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