San Diego Union-Tribune

July 5, 2001

A-1

New FERC member seems attuned to state's woes
  Texan may become agency's next chief

By TOBY ECKERT
COPLEY NEWS SERVICE 

WASHINGTON -- During his first weeks at the Federal Energy Regulatory Commission, Pat Wood has set a decidedly different tone in the agency's strained relationship with California.

After meeting with Gov. Gray Davis last week, Wood -- who was recently appointed to the commission by President Bush and is widely expected to be named chairman soon -- praised the state's efforts to come to grips with its power problems. It was a stark contrast to the almost constant criticism from FERC Chairman Curtis Hebert.

"It certainly seems to me that both the political leadership and the regulatory leadership of the state are committed to the kind of infrastructure upgrades that are needed to really get supply and demand back into whack," Wood said, referring to power plants being built in California.

The former Texas utility regulator also raised the possibility of closer
cooperation between FERC and state regulators, including a "joint effort" on inspecting power plants. State officials have accused generators of idling plants to drive up electricity costs, a charge generators deny.

"If we're kind of co-regulators with the state, and in many regards we are, it's helpful to work off the same set of facts so you get to conclusions much more expeditiously," Wood said, though he was quick to add that he has not seen any evidence of intentional withholding of supply.

State officials hope Wood's statements signal that FERC is poised to take a more aggressive role in helping the state. If elevated to chairman, Wood would set FERC's agenda and shape its approach to dealing with California.

The agency regulates wholesale electricity and natural gas markets, which have subjected the state to skyrocketing prices.

Wood "has brought a very good perspective to FERC," said Howard
Gantman, a spokesman for Sen. Dianne Feinstein, D-Calif., a frequent critic of the commission. "He seems very interested in getting to the root of the problem and finding solutions."

Throughout the crisis, the state's relationship with FERC has been poisonous.

Davis criticized the commission for being slow to rein in electricity prices, while Hebert faulted the state for crafting a bad deregulation law and failing to build enough plants to keep up with demand.

Davis issued a guardedly conciliatory statement after his meeting in
Sacramento with Wood and Commissioner Nora Brownell, who is also new to FERC.

"In a refreshing change from my past dealings over the past year with the agency, these commissioners offered a problem-solving approach in resolving California's energy challenge," Davis said. He added, "It appears that FERC may finally be poised to do its job controlling energy costs."

Threats criticized

Despite the soothing words, there is no shortage of potential flash points between Davis and FERC.

Wood, who professes a "religious zeal about competition," raised concerns about a possible move by the California Public Utilities Commission to keep retail power customers from shopping around for alternative providers.

He also criticized threats that Davis and other California politicians have made to seize power plants and impose a windfall profits tax on power sellers.

"I think the rhetoric's still pretty hot out there. If I were a generator looking at 50 states, one that's talking about a windfall profits tax and expropriation of property and all that is not a great climate," Wood said.

For his part, Davis has questioned whether the recent price curbs imposed by FERC in the West will be enough to tame soaring wholesale power costs that have bankrupted one utility, cost the state treasury billions of dollars and
raised consumers' power bills.

Davis has also made it clear that he expects hefty refunds to result from the FERC-brokered talks between the state and power providers, which are in their second week.

"I will be vigilant in insisting that Californians get their money back," Davis said.

California consumer activists are taking a wait-and-see attitude toward Wood, saying they know little about him.

A major role

"My impression from afar is he seems to be more moderate," said Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

Once considered a bureaucratic backwater, the five-member FERC has
come to play a high-profile role in the California debacle and other disputes involving the largely deregulated wholesale power markets. 

The commission is charged with ensuring that "just and reasonable" prices prevail.

Bush is expected to make Wood the FERC chairman because Hebert is seen as too much of a lightning rod.

Before coming to Washington, Wood, who turned 39 yesterday, headed the Texas Public Utility Commission. There he oversaw the state's move toward a deregulated electricity market. Like Hebert, Wood is convinced that a free market will deliver cheaper power to consumers than a highly regulated one.

"I just think customers fare better when they have more choices," Wood said.

But consumer advocates and others who have worked with Wood in Texas say his zeal is tempered by a healthy dose of pragmatism.

"Bottom line, it's all about the customer. Y'all will hear me say that until you get sick of it," Wood said. "We want to make sure that the world we're moving to is better than the one we left."