Billions Could Await Grandma Millie

On the first day of summer, the Federal Energy Regulatory Commission?s newest member, who is considered the Western voice in a group that finds California issues troubling and, well, ?out there,? took time to speak with me about her views on key issues. Suedeen Kelly discussed liquefied natural gas, renewable energy, and the chance that Grandma Millie might get considerably more in refunds if the courts and Congress expand FERC?s authority. Kelly has been on the commission since November and awaits Senate confirmation of her full five-year term, which begins July 1. Kelly said the Golden State could recover a few more billion dollars in refunds for alleged market manipulation if FERC were given more enforcement authority by Congress. Refunds could also increase if the Ninth Circuit Court of Appeals interprets the Federal Power Act to allow FERC to consider refunds for unjust power costs incurred before October 2000, according to Kelly. The state has demanded $9 billion in refunds from FERC and has recovered about $4.7 billion in FERC-related settlements. In addition, California would see significantly more money if FERC could ?impose penalties on bad actors and award that money to consumers,? Kelly said. The various energy bills that keep popping up in Congress include a provision that would expand the commission?s civil and criminal enforcement authority. ?If there is a legal way to give refunds prior to October 2000, my understanding is that there is another $1 billion to $2 billion available there. That is where the problem lies,? Kelly added. The state attorney general sued FERC for its restricted interpretation of its refund authority, and the parties are awaiting a decision from the Ninth Circuit. Kelly said she understands how Californians and other Westerners were affected by the energy crisis. ?I bring the experience of having lived in those systems, those institutions, and that culture, which is different in a number of ways from the East,? she said. Kelly practiced energy law for 25 years in New Mexico and did a short stint at the California Independent System Operator in 2000. While Kelly appears willing to give more to Californians via refunds, she?s adamant that California regulators get less authority over LNG. In spite of her Western perspective, Kelly was quick to side with her fellow commissioners and point out that California Public Utilities Commission president Michael Peevey wrongly insists the state has sole say on the matter. She added that FERC was awaiting word from him on ?what he would like.? Apparently, Kelly gives short shrift to the CPUC?s brief arguing the state has authority to permit the Sound Energy Solutions proposed LNG terminal in Long Beach. Peevey also sent a letter to FERC outlining the commission?s position on LNG authority in general, in which he completely disagrees with FERC?s position. On the jurisdictional front, FERC contends it has exclusive jurisdiction over importing LNG and its transport in interstate pipelines in California. A few days before their mid-June business meeting, the four FERC commissioners quietly rejected petitions by the CPUC and others challenging federal regulators? stance ( Circuit , June 18, 2004). FERC, however, is not on solid ground and does have a couple of outs. It has noted of late that the state Coastal Commission will play a significant role in LNG siting and hopes the court will resolve the turf issue. ?It is very clear that California has jurisdiction under the state law relating to the Coastal Zone Management Act,? according to Kelly. She added that FERC reached an early decision on the rehearing so the court would take up the matter and there ?would be a final determination quickly.? Kelly does not see the push to develop LNG as hampering the growth of renewables because alternative energy, she says, particularly wind power, is significantly cheaper than LNG. Federal regulators and renewables worked in tandem?albeit in different locations?when I visited Kelly. The sun was shining on the nation?s Capitol, and both Washingtonians and the photovoltaics on FERC?s rooftop were taking advantage of the day. According to the real-time digital display of the months-old solar systems at FERC?s headquarters, the panels had pumped out 9,600 kWh over the last several months. Although they meet a fraction of the agency?s needs, the solar panels are a sign that renewables are getting more attention from federal regulators. Renewables prospects got a bit greener after the commission in June unanimously adopted Kelly?s proposal to have FERC assess which of its policies need revamping to accommodate renewables growth. Included in FERC?s annual strategic plan that lays out priorities and dictates the budget, the measure will focus on transmission policies and practices. In addition, a group of FERC staffers began working on a white paper on the issue at the beginning of the year. As an attorney, Kelly represented the country?s biggest wind developer, FPL Energy, and wrote several law articles promoting green power. Kelly said it was up to the governor and the Legislature to decide which agency is better suited to handle the permitting of transmission projects, the CPUC or the California Energy Commission. The switch of authority, if any, is expected to be included in the Schwarzenegger administration?s California Performance Review, which will rework the state bureaucracies. A draft is expected June 30. Largely because of her representation of FPL, Kelly has recused herself from a significant number of cases. FERC regulations require that she not participate in any proceedings that involve a client, an affiliate, or a former client?be it an applicant or intervenor?for 12 months. Three-quarters of those cases are related to her representation of FPL. While the revolving-door rules will no longer apply after the end of June, she will not be able to vote on some cases now before the commission, including refund proceedings and the California Independent System Operator?s market redesign. Kelly said she doesn?t see herself philosophically aligned with any of the other commissioners. And she does not put deregulation first and foremost. ?The goal of regulations is to protect consumers,? she said, noting that a functional and truly competitive market is a means to that end.

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Billions Could Await Grandma Millie

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