News Analysis

Pennsylvania loses faith in FERC, looks for help from the Justice department.

"A well functioning market on an average day works better than we regulators can do on our best day." Perhaps this quote, attributed to Pat Wood, chairman of the Federal Energy Regulatory Commission (FERC), best captures the prevailing view among transmission officials in the Northeast. But the feeling out West is decidedly different. So is the mood among state utility regulators.

Ask Marilyn Showalter, chairwoman of the Washington Utilities and Transportation Commission.

"We regulators," she notes, "may not be perfect. But on our worst day we don't do as much damage to consumers as a bad market." And Showalter, increasingly, is not alone in that opinion.

Speaking at a meeting of regulatory attorneys held in June in San Francisco, she applauded her state's decision to maintain a traditional approach to regulating energy utilities, and suggested that the folks in Washington, D.C. have got it wrong.

Consumers do not want choice, she argues. They want reliable power at a low price.

Yet she fears that Chairman Wood remains oblivious to that notion-and that FERC will move ahead with regional transmission organizations (RTOs) and a standard market design (SMD).

And many state regulators are losing faith, asking whether such a market is needed and whether benefits will ever trickle-down to consumers. Certainly, enough has occurred over the past year to give reason to be leery. Many now question what so far has been FERC's best argument-that California's power crisis stemmed from flaws in market design, and could be fixed with an RTO and SMD.