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News Analysis

A leaner bureaucracy sharpens its market-monitoring tools.
Fortnightly Magazine - March 15 2002

1981-1988, former federal bankruptcy judge in Los Angeles.

C.M. "Mike" Butler , 1981-1983, attorney in Houston.

David Hughes , 1980-1984, formerly with the law firm of Duncan, Weinberg, Genzer & Pembroke in Washington, D.C.

Georgiana Sheldon , 1977-1985, officer of the United States Energy Association in Washington, D.C.

Matthew Holden , 1977-1981, professor of American government at the University of Virginia in Charlottesville, Va.

George Hall , 1977-1981, senior advisor with PA Consulting Group in Washington, D.C.

Charles Curtis , 1977-1980, president and chief operating officer of the Nuclear Threat Initiative in Washington, D.C.

Don Smith , 1973-1979, private attorney at time of death in 1993.



The top energy issues of the day often influenced who was chosen to sit on the commission. "Commissioners came from the federal government in the 1980s," says Richard, a Democratic appointee who was labeled the "Boy Commissioner" because he was only 29 years old when he joined the commission. "It had more of a national bent than it does now."

Current commissioners Nora Mead Brownell, Pat Wood, Linda Breathitt each come from state public utility commissions. "In the current debate over electric restructuring, it bodes well for dealing with the states," Richard adds.

The renewed interest in the level of FERC's oversight of the electric and gas industries also may be pushing the pendulum back in the direction of a more powerful FERC bureaucracy.

Ten years ago, FERC had a staff of 1,500 on the eve of implementing Order 636. After that, though, the commission experienced a series of budget reductions. Hoecker, who served on Holden's staff in the late 1970s, initiated his FERC First! re-engineering program, which sought "to make regulation efficient and beneficial where it is required and less intrusive and even unnecessary where it is not." The net effect of all of these moves was a reduction in staff by 300 to 1,200 employees.

While FERC was becoming a leaner bureaucracy, its staff had to use fewer resources to manage the implementation of electric industry restructuring measures associated with Orders 888, 889, and 2000.

Indicating it plans to take a more activist role in monitoring market behavior, FERC unveiled several initiatives last fall, including a plan to create a new division called the Office of Market Oversight and Investigation, which will combine the commission's market monitoring resources into one group.

"To a very large degree, the FERC's tasks are returning to what the FERC's tasks were prior to 1938 [when the Natural Gas Act was passed by Congress], but in a much magnified form," explains Holden, who has worked as a professor of government at the University of Virginia since he left the commission in 1981. "Electricity is now becoming the center of FERC's activities. Electricity was an historic center of the Federal Power Commission's activities."

In Congressional testimony in late January on the effects of Enron's collapse on energy markets, current Chairman Wood told the Senate Energy and Natural Resources Committee that in "the new world of markets, the need for information is very important. It is, to me, disclosure