As the tentacles of the Enron Corp. financial calamity spread into all corners of the federal government last week, FERC Chairman Pat Wood and Commission Nora M. Brownell disputed reports that Enron Chairman Kenneth Lay played a major role in getting them appointed to the Commission last year.
“One man made my appointment…my commander in chief,” Wood said at a press briefing last Wednesday. But he noted that he and Brownell didn’t see “any problem” if others expressed support for them, including Lay. “I did not ask anybody to support me,” quipped Brownell, when asked about Lay’s part in her nomination. Brown was a Pennsylvania regulator, and Wood was a Texas regulator before coming to FERC in 2001.
But sources contend Lay had a hand in both appointments. “…Enron played a key role in her candidacy, and Wood’s too,” said an industry insider in Washington, DC. “When they were looking for candidates, Lay put her [Brownell’s] name in the hat,” he noted. Wood already had close ties to President Bush, and any support from Lay was seen as the icing on the cake. It was also pointed out, however, that it is routine for an administration to accept names for review for possible jobs from a wide variety of sources.
Philip Moeller, an energy adviser to former Sen. Slade Gorton (R-WA) and now at Calpine Corp., said vying for a FERC appointment was “like a political campaign.” This was especially true last year at FERC, when it “rose to a level of politics that was unprecedented for a federal agency.” He should know — he was interviewed by the White House to fill the still-vacant fifth Commissioner seat at FERC.
As for the reason for Lay’s endorsements, “I think both Wood and Brownell were very supportive of the deregulation policy that Enron was trying to get passed at the state level.” In fact, Brownell “took a bullet for Enron” when she backed the deregulation plan for Pennsylvania over the reported objections of then-Gov. Tom Ridge, the source told NGI.
But he doubted Wood and Brownell espoused energy policies solely to win over Enron. Wood “really believes in that [deregulation] philosophy.” The same can be said of Brownell, the source noted.
In the final analysis, “I don’t really think it’s wrong that Enron supported them…This is the old guilt-by-association game,” he said. However, “now that they [Wood and Brownell] are in the public spotlight they will have to be balanced and careful about formulating their positions” on energy policy.
This is not the first time that concerns have been raised about Lay’s influence at FERC. Last year, the General Accounting Office (GAO) investigated charges that Lay attempted to influence former FERC Chairman Curt Hebert to switch his views on FERC policy dealing with access to the electricity grid, in return for his endorsing Hebert to continue on as chairman of the Commission. Lay claimed it was Hebert who pressured him for the endorsement. In the end, the GAO cleared both Lay and Hebert of any criminal wrongdoing and ethics violations (See NGI, Sept. 24, 2001). Hebert ultimately was replaced by Wood as FERC chairman.
Despite the GAO finding, Sens. Joseph Lieberman (D-CT) and Dianne Feinstein (D-CA), who requested the investigation of Lay and Hebert, said they still had concerns. “The fact remains that GAO confirmed that the chairman of a federal regulatory commission discussed support for his continued appointment as chairman with the senior official of a major energy company regulated by the commission. We believe that such behavior undermines the public’s confidence in federal regulators in general and in the Federal Energy Regulatory Commission in particular.”
As another potential fallout from the Enron debacle, Calpine’s Moeller believes that President Bush’s nomination of Joseph Kelliher, senior policy advisor at the Department of Energy (DOE), to fill the fifth seat of FERC could face tougher scrutiny in the Senate. The White House announced the president’s intent to nominate Kelliher, a Republican, last October, but it has yet to forward the nomination paperwork to Capitol Hill.
Kelliher is well liked and respected on Capitol Hill and within the energy industry, and his nomination had not been expected to encounter any resistance in the Senate — but that was before Enron.
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