Commission Watch

The commission nails companies, but orders payments.

The Federal Energy Regulatory Commission (FERC) finally dealt with the many issues that arose out of the 2000/2001 California energy crisis. On June 25, FERC issued a slew of orders that settled some old disputes, gave a glimpse of the future, and offered insight into the commissioners' thinking.

California Gov. Gray Davis called the decisions by FERC "reprehensible." He equated punishing Enron to "beating a dead horse." Finally, Davis said it is "clear that ratepayers will have to look to the courts for relief, since none is coming from FERC." What made Davis so angry? A recap is in order.

Deathblow to Enron Trading. In what it called its first "death-penalty case," FERC unanimously revoked market-based rate authority and terminated blanket-marketing certificates for Enron Power Marketing Inc. and Enron Energy Services, collectively known as Enron Power Marketers. But in order to cause no more harm in the bankruptcy proceeding, FERC said it would allow Enron to "unwind" its present electric and natural gas positions and then notify FERC of its last trading date.

Commissioner Nora Mead Brownell: "This case more than any other makes it clear when you have as part of your business plan systemic market manipulation, you will not have market-based rate authority."

Commissioner William Massey: "Profit maximization is not a reason for market manipulation. We shout that loudly and clearly."

Commissioner Pat Wood III: "By revoking the company's authority to sell electricity at market-based rates, and similarly to sell natural gas under a blanket certificate, we send a clear signal that competitive markets must work in the interest of customers and the public interest."