Subject: FERC to be hauled in before Senate Committee
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Date: Tue, 12 Jun 2001 07:37:14 -0700 (PDT)

The appearance of FERC commissioners before the Senate Governmental Affairs Committee the Wednesday after next is probably driving the timing of the FERC's meeting next Monday at which they will consider CA matters.  It is possible that FERC is trying to fashion a "silver bullet" to use at the Senate hearing.  The article below also discusses Feinstein's allegations of undue influence at FERC.  Ray

Lieberman summons FERC members for hearing
Gas Daily, June 8, 2001

Taking a lead from Democratic California Sen. Dianne Feinstein, Sen. Joseph Lieberman,
D-Conn., said Wednesday that he would haul FERC commissioners before the Senate Gov-ernmental
Affairs Committee to find out if the agency has exercised proper oversight of
electric rates. The hearings promise to put further heat on FERC, which has thus far resisted
calls to impose price caps on the California power market.

Lieberman said he would hold a hearing on June 20 to find out "whether the Federal
Energy Regulatory Commission has been properly executing its duties to provide 'fair and
reasonable' electric rates." The call for hearings was Lieberman's first move upon becoming
head of the committee.

"In the immediate future, I hope to focus the committee's oversight and investigate duties
on an examination of high energy prices and what can be done to lower them," Lieberman said.
That agenda should cheer California's Senate delegation and California Gov. Gray Davis,
who have accused FERC of dereliction of duty when it comes to monitoring the state's energy
markets. Lieberman's announcement, in fact, comes in direct response to a plea from Feinstein to
launch an investigation into FERC's relationship with the industry it is charged with monitoring.

In a letter to Lieberman following the recent Senate power shift, Feinstein hinted at the
"undue influence" that the energy industry exercises over the commission. FERC, said Feinstein,
has failed "to fulfill its legally mandated function under the Federal Power Act to restore 'just
and reasonable' electricity rates" (GD 5/31).

Feinstein's concerns were prompted in part by a New York Times report that Enron Chairman
Kenneth Lay had attempted to lobby FERC for increased retail competition and access to transmission
lines. According to the newspaper, Lay offered FERC Chairman Curt Hebert a tit-for-tat
deal in which Hebert would help expedite retail competition in exchange for political support.
Hebert reportedly refused the deal - and Lay disputed Hebert's account of the conversation.

A PBS news special co-produced by the Times may further help bolster public perceptions
that the industry is unreasonably close to FERC, however. According to the program, which
aired Tuesday, FERC did not move ahead with an investigation of alleged manipulation of the
California natural gas market until after the Times made certain confidential documents public.

FERC sent the case to an administrative law judge on March 28 - one day after a story
ran in the Times on the controversy surrounding El Paso Natural Gas' leasing of capacity to
affiliate El Paso Merchant Energy (GD 4/29). Prior to that, coverage of the story had been
limited largely to the trade press.

Establishing that FERC has indeed failed to follow federal guidelines for just and reasonable
rates may prove difficult, however. At a recent meeting of the Energy Bar Association in
Washington, D.C., Douglas Smith, former general counsel with FERC, noted the difficulty in
finding criteria for establishing just and reasonable rates; no statute, he said, spells out the
terms precisely (GD 4/27). NH