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Posts Tagged ‘Joseph T. Kelliher’

CHRIS NEWKUMET, Platts.com, March 9, 2009

kelliherUS Federal Energy Regulatory Commission member Joseph Kelliher on Monday said he will leave the agency March 13.

Kelliher was chairman of FERC from July 9, 2005, until January 22, 2009, and has served at the commission since November 20, 2003.

Just before the inauguration of President Barack Obama, Kelliher announced he would surrender the gavel to a chairman of Obama’s choice, which turned out to be Jon Wellinghoff, who is serving on an acting basis.

With a change in political party in the White House, the FERC chairman typically leaves the commission within weeks of the inauguration, regardless of how much time is left on his term.

Although Kelliher’s term as a commissioner does not end until June 2012, he stopped participating in all official commission business when he stepped down as chairman.

Under the commission’s ethics rules, sitting commissioners are required to recuse themselves from cases that may impact a potential employer with whom the commissioner is discussing future employment.

On the five-member commission, administrative rules allow for a three-member majority reflecting the president’s party, including the chairmanship. While all commissioners must be confirmed by the Senate, the chairman is simply designated by the White House in a letter setting out the president’s choice.

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MendoCoastCurrent, January 7, 2009

Federal Energy Regulatory Commission Chairman Joseph T. Kelliher today issued the following statement:

Today I announce my intention to step down as chairman of the Federal Energy Regulatory Commission (FERC), effective January 20, 2009. Although my term as commissioner does not end until 2012, I will also immediately begin to recuse myself from FERC business, as I explore other career opportunities.  

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GERRY NORLANDER, Pulp Network, November 25, 2008

President-elect Obama has named Dr. Susan Tierney and Rose McKinney-James to his transition team for the U.S. Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC), which is organizationally within DOE.

Both appointees, former state utility commissioners of Massachusetts and Nevada, respectively, have a record of supporting electricity industry deregulation, or, as it is euphemistically named, “restructuring.” 

Thirty five states did not restructure, no state has restructured since 2000, and several states halted plans to adopt it when they saw its results in states like California and New York. 

The “restructuring” model strips the power generation function away from state-regulated utilities under the premise that the generation function can be deregulated if it is structured to be competitive. An implicit assumption of restructuring, which we reject, is that if the market price of a utility service is “competitive” it will then necessarily satisfy the legal requirement of being “just and reasonable.”

This regulatory fad peaked in the last decade of the last century when it was lavishly promoted by Enron’s Ken Lay, embraced by some state regulators, accepted by both the Clinton and Bush administrations, and pushed by FERC. FERC’s regime now lacks consumer support and confidence. 

To bring about functionally deregulated wholesale electricity markets without statutory authorization, FERC administratively morphed the Federal Power Act system of filed rate regulation into one of unfiled, unreviewable, and unrefundable wholesale market rates. The FERC system is now built upon “organized” spot markets for wholesale electricity such as those run by the NYISO and other Regional Transmission Organizations (RTOs), where energy is sold by sellers with “market-based rates.”

The FERC system has its greatest impact in restructured states that allowed utilities to sell off power plants whose output had been priced based on the cost of production, requiring most electricity to be bought at wholesale “market-based rates” eventually passed through to retail customers.   

Mathematical game theory, economics lab simulations, and experience demonstrate that the wholesale electricity spot markets that are at the heart of restructuring can be gamed and manipulated to drive prices well above competitive levels beyond the capacity or will of FERC to correct.

Even for those who would conflate the notions of competitiveness and reasonableness, the generation function is increasingly dominated by fewer large companies as the industry consolidates, undercutting the notion that many sellers will someday make electricity a buyer’s market and preclude the need for rate regulation. 

According to Duke Power CEO James Rogers, in light of the recent financial market developments,

“I think within 18 months you’ll see either consolidation or acquisition of all of [the major independent power producers].”

“The case for consolidation in our industry is more compelling today than it’s been in my 20-year career as CEO because of what’s going on in capital markets, because of the economy we’re in and no growth….”

Although most consumer groups are disappointed by the results of restructuring, major utility holding companies formed as a result of restructuring and the repeal of PUHCA, investment banking institutions, energy producers and wholesale traders, deregulated retail sells and the energy derivatives industry still push hard for preservation and expansion of the restructuring model.

Proponents of deregulation such as EPSA and the NYISO occasionally announce reports or studies purporting to show advantages of deregulation. Typically, these reports and studies have loopy methodologies, fail to address how the ISO/RTO markets actually affect consumer prices, and fail to pass any reasonable test of academic rigor. Stated John Kwoka, Northeastern University, in his findings, there is no “reliable and convincing evidence that consumers are better off as a result of the restructuring of the U.S. electric power industry.”

The Obama FERC Transition Team

Dr. Susan Tierney
Dr. Tierney, a consultant with the Analysis Group, has also been mentioned in the trade press as a possible candidate for FERC Chairman. With Cornell degrees in regional planning, she has a long, extensive and varied background in energy issues, including work for the Department of Energy in the Clinton administration. Her biography indicates that in recent years a significant part of her consulting work has been on behalf of electric utilities and industry stakeholders in defense of electric industry deregulation or “restructuring.” 

Rose McKinney-James 
According to Obama’s Change.gov web site, another transition team member, apparently overseeing the FERC appointments, is Rose McKinney-James:  

Rose McKinney-James is the Managing Principal of Energy Works Consulting. Previously she served as the President and CEO of the Corporation for Solar Technology and Renewable Resources (CSTRR) and Chair of the Nevada Renewable Energy Task Force. Past positions also include Commissioner with the Nevada Public Service Commission, Director of the Nevada Department of Business and Industry, Chief of Staff for the City of Las Vegas and Project Manager for the Nevada Economic Development Corporation. McKinney-James serves on the Board of Directors of MGM-Mirage, Employers Insurance Group, Toyota Financial Savings Bank, the Energy Foundation, the American Council for an Energy Efficient Economy (ACEEE), and the Nature Conservancy. She is the Board Chair for Nevada Partners.

According to Politico,

Rose McKinney-James single-handedly will lead the review on Federal Regulation and Oversight of Energy. She has a strong background in renewable energy and is currently the managing principal of Energy Works Consulting. She previously served as president and CEO of the Corporation for Solar Technology and Renewable Resources.

James was formerly a Nevada utility regulator. After the Western states experienced the results of market manipulation, she, along with numerous former state utility commissioners from restructured states, signed onto a 2003 Declaration of Consumer Benefits from Wholesale Power Markets, a statement indicating support for the restructuring model.  Since then, however, James appears not to have been actively involved in the continued promotion of restructuring and she reportedly has a keen interest in renewable energy. 

Conclusion

We would certainly be more hopeful of change in the interests of consumers if the DOE/FERC transition team more reflected the judgment of most states not to restructure, and better realized the experience of consumers in the states that did. Nevertheless, it cannot be assumed that Obama transition team members will recommend candidates for key positions who would continue the relentless restructuring efforts of past administrations without reflection upon the results to date and without heeding consumer concerns. 

Perhaps it is a hopeful sign of change that the latest rumored candidate for a FERC position is John H. Norris,  Chairman of the Iowa Utilities Board. Iowa, a state that once considered but did not adopt restructuring.

Update, December 4, 2008

The Longview Washington Daily News, in a story about the controversial Bradwood LNG terminal project for the Columbia River, states:

Obama also could reshape FERC itself.

Terms of the four FERC commissioners who voted in favor of the Bradwood project will expire during Obama’s first term, starting in 2009, Tamara Young-Allen, a spokeswoman for the agency, said in an e-mail. The other three commissioners’ terms expire in 2010, 2011 and 2012. (Commissioners serve five-year terms.)

Obama can also appoint a new FERC chairman. That would shift the current chairman, Joseph Kelliher, into a regular commissioner seat. It’s unclear whether Kelliher would finish out his term, which lasts through 2012, if he is removed from the chairman’s position.

When asked about his plans, Young-Allen noted, Kelliher has said, “When I have something to announce, I will tell you.”

VandenHeuvel, of Riverkeeper, speculated that Obama will appoint Jon Wellinghoff as the new chairman. Wellinghoff is a Nevada Democrat who was the only FERC member to oppose the Bradwood terminal in the September vote.

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Publisher Note:  FERC Chairman Joseph T. Kelliher announced his resignation effective January 20, 2009.

GERRY NORLANDER, Pulp Network, November 5, 2008

With the election of a new president comes renewed speculation about leadership change at the Federal Energy Regulatory Commission (FERC) in an Obama administration.

The president . . . can designate a new chairman, who generally will belong to the party in the White House. But the president must await a commission vacancy to actually appoint a new commissioner and shift the balance of power if there is a change of party. No more than three commissioners can belong to the same party, so currently FERC has three Republican commissioners and two Democrats. Normally, however, a chairman who is replaced will not want to remain as a commissioner and will resign. 

Currently FERC is filled with a bipartisan cadre of five pro-deregulation commissioners, all appointed by President Bush, who appear intent on approving mega mergers of utility holding companies and implementing the discredited Enron agenda to supplant traditional regulation with reliance on unfiled, unreviewable, and unrefundable “market-based rates” and “organized” spot markets such as those run by the NYISO.

As with recent presidents of both parties, the incoming president received significant campaign financial support from utility executives, investment bankers, and energy traders who still promote electricity deregulation, but hope still remains for change in the interest of consumers, for whose protection the Federal Power Act was enacted in 1935.

President Obama will name a new FERC Chair, to replace the current Chairman, Joseph T. Kelliher.  A former lobbyist, congressional staff lawyer for Texas Rep. Joe Barton, and coordinator of Vice President Cheney’s controversial energy task force, Kelliher steadily continued the agency’s efforts to deregulate wholesale electric rates. Under his leadership FERC continued its unresponsiveness to widespread consumer concerns about unreasonable rates and problems with the spot markets and “market-based rates” FERC approved in an effort to supplant traditional filed rate regulation.  Although he received Senate confirmation of a new term earlier this year, it has been reported that Kelliher agreed with Senator Harry Reid to resign if a democrat is elected President. That time has now come.

Commissioner Suedeen Kelly was mentioned a year ago as a possible FERC Chair in a democratic administration. A protege of deregulation democrat Senator Bingamon, Chairman of the Senate Energy and Natural Resourcees Committee, she was formerly an energy industry lobbyist, law professor, Chair of the New Mexico Public Service Commission, and was an attorney for the California ISO. It is not clear, however, if the democratic president envisioned last year when her name was floated for Chair was Barack Obama. If, instead of becoming Chair, another chair is picked, Commissioner Kelly might move on when her seat becomes vacant June 30, 2009.

Assuming that Chairman Kelliher leaves, will the two other republican commissioners making up the current majority — Marc Spitzer (former Arizona utility regulator and republican cousin of former New York Governer Eliot Spitzer) and Philip Moeller (a former utility lobbyist) — stay on under a new Chairman? 

FERC has grown in importance to electricity consumers in states like New York that allowed their utilities to sell their power plants (formerly operated on a state-regulated cost of service basis) to new owners with “market-based rates” from whom they now must buy power for customers based on what the market will bear in flawed FERC-approved spot markets. It is thus essential for the new President’s FERC picks to be sensitive to more than the usual major utility, power generators, energy traders, lobbyists, and other institutional market “stakeholders.” The new picks must be more dedicated than the current FERC to the achievement of just and reasonable electricity rates, as the Federal Power Act requires. 

UPDATE:

November 25, 2008 — Obama Picks Transition Team for DOE, FERC.

December 8, 2008 — Las Vegas Review Journal says U.S. Senate Majority Leader Harry Reid supports Jon Wellinghoff for FERC Chairman:

At the Federal Energy Regulatory Commission, one of two Democrats is Reid ally Jon Wellinghoff, a former Nevada public utility consumer advocate. In Washington, Wellinghoff has aggressively pushed for energy efficiency and renewable technology, Energy Daily reported.

Asked about Wellinghoff in a recent interview with the Review-Journal, Reid said he definitely believes the Nevadan should chair the FERC.

December 18, 2008 — Other names floated for FERC commissioners or chairmen include two state utility commission chairmen, Charles Box from the Illinois ICC and John Norris from the Iowa Utilities Board.

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