[BETA] Fortnightly

On the morning after Labor Day, back from one last beach fling, Wall Street Journal assistant features editor Max Boot published an editorial castigating California Gov. Pete Wilson for his alleged failure to "take a stand" on electric deregulation in the Golden State ("California's Governor isn't Plugged into Deregulation Debate," Sept. 5, 1995, p. A15). "There's a leadership vacuum here," writes Boot. "Governor Wilson is partly responsible for the problem ... he appointed Mr. Fessler and the other PUC members. But he hasn't taken a stand on PoolCo or a direct hand in the negotiations."Well, good. But let's not stop there. Why not ask Bill Clinton when he last lunched with Elizabeth Moler to chew the fat on interstate electric markets? Have the two even met? Now I can't say for sure if Pete Wilson can tell a purchased-power contract from a Contract for Differences. But I'm willing to bet that Bill Clinton can't distinguish between point-to-point and network transmission. And yet, the changes that lie buried between the lines in the Notice of Proposed Rulemaking (NOPR) on stranded investment and electric transmission, issued last Spring by the Federal Energy Regulatory Commission (FERC), certainly appear much more drastic than those found in the Energy Policy Act of 1992, which required an act of Congress.

With Chair Moler at the helm, and Bill Clinton far in the background, the FERC treads cautiously but unfettered as it remakes the largest single industry in the country. Whose idea was it?

Nosy Governors

In my time I can remember at least three instances when state governors have played a leading role in the policy of electric regulation.

Back in 1978 in New Hampshire, Democratic gubernatorial candidate Hugh J. Gallen ousted incumbent Republican Meldrum Thomson when he (Gallen) promised to sign pending legislation that would bar any rate-base allowance for construction work in progress (CWIP) (em a concern prompted by a case that year that hiked rates for Public Service Co. of New Hampshire to reflect CWIP on the Seabrook nuclear plant. Gallen won the election and signed the anti-CWIP bill in May 1979. By August, the state commission had retroactively removed all Seabrook CWIP from PSNH rate base, setting the stage for a famous bankruptcy case a dozen years later.

During the next decade, Arkansas Gov. Bill Clinton immersed himself in l'Affaire Grand Gulf. That case involved unwanted costs and output from the Grand Gulf nuclear unit 1, allocated by the FERC among the four operating subsidiaries of Middle South Utilities, Inc. (now Entergy). Clinton wanted to deflect high rates away from Arkansas (em and toward Middle South customers in Mississippi and Louisiana. The U.S. Supreme Court eventually got involved.

And in the 1990s, spurred on perhaps by Raytheon and other large customers demanding lower rates, we have seen Massachusetts Gov. William Weld and Lt. Gov. Paul Cellucci file a proposal with state regulators to force electric utilities to develop deregulation plans by the end of the year. The commission obliged in a recent order (D.P.U. 95-30, Aug. 16, 1995).

Inquisitive Lawmakers

If the executive branch