[BETA] Fortnightly

ATTENDED ANY HEARINGS LATELY AT THE FEDERAL ENERGY Regulatory Commission? They're getting ugly. I see a federal agency under siege (em from without and from within.

The Commission seems to have lost the easy confidence that reigned during Elizabeth Moler's tenure. Don't blame new Chairman James Hoecker. He's getting it from all sides, and it's not his fault.

Consider the bottomless pit known as electric system "reliability." We need new laws to pin down FERC authority. The bullet points released three weeks ago by the Clinton Administration would spell out FERC's role over a new self-regulating reliability organization. That idea mirrors the white paper issued in December by the Blue Ribbon Panel at the North American Reliability Council: to reform NERC as NAERO (North American Electric Reliability Organization), a self-regulating industry group authorized by Congress, subject to FERC review.

In fact, Hoecker appears willing to stand back and give some room to the NERC, so that it, like Gorbachev and communism, can "reform from within." But not everyone agrees. (Remember Perestoika?) Nearly 50 utilities, marketers, individuals and industry groups have filed comments on the NERC plan. (See, www.nerc.com/~blue/view-comments.html.)

But there's a catch. Congress hasn't acted. Power marketers have stepped into the void, urging the FERC to take the lead. Even as the Administration released its plan, the Coalition for a Competitive Electric Market, joined by John Anderson's group, ELCON, filed a monumental petition (100-plus pages of "must-read," in my opinion) asking the FERC to abandon many of the basic concepts of Order 888 (em functional unbundling, native load and network transmission service! (em and build a new transmission model driven entirely by paid reservations. (Docket No. rm95-8-000, petition filed March 25, 1998.)

Any FERC move is likely to face court review on shaky statutory grounds. I say Hoecker would rather wait for Congress and let NERC do its thing. But the power marketers do have a point. The FERC can regulate transmission. That ought to give it a backdoor entry into reliability. But if Hoecker accedes to marketer demands he could end up stabbing NERC reform in the back. The Blue Ribbon Panel would melt into irrelevance. All eyes would focus on the FERC rulemaking.

So a few very clever troublemakers, pursuing their interests as is their right, have the Commission nearly paralyzed.

But what no one could have expected is that some of chaos begins very close at hand, emanating from the Commission itself.

It all began Aug. 27, 1997, during the Washington, D.C., summer doldrums. The Coalition Against Private Tariffs asked the FERC to quash the so-called "tagging" rules adopted in May (and later revised) by NERC. Known both as "NERC Operating Policy 3," and as "iTIS" (the interim Transaction Information System), the tagging rules used a computer-based electronic spreadsheet to identify parameters for interchange transactions, including all intermediary control areas along the contract path (not just the buyer and seller). The rules made all data available to all control areas along the way, many run by utilities that compete with marketers.

CAPT was led by CCEM and its