Some will stray from ethical behavior. But markets must be regulated to maintain confidence.
Grading Pat Wood
Reviewing the FERC chairman's first year, and what he might do next.
This September, Pat Wood III completed his first year as chairman of the Federal Energy Regulatory Commission (FERC). Some long-time FERC watchers gave Fortnightly some insights into how this chairman has performed so far, and what we might expect from him in the future.
For starters, one former FERC commissioner rates Wood's performance so far as "damn good." The former FERC commissioner says, "He did the right things before Congress, which was investigating whether FERC acted properly in addressing the California crisis. Congress could have fried eggs on his forehead. But he had that trusting, happy homeboy Texas look that won them over, and he stuck to his guns."
On a policy front, this former FERC commissioner says, Wood wisely has not let state-level opponents defeat either his standard market design (SMD), or his movement forward from the 1992 Energy Policy Act. Certainly, it is Mr. Wood's activist nature that has won many supporters.
One high-powered attorney admires the chairman's efforts in trying to pull together 10 years of FERC initiatives, and in trying to bring clarity to energy commodity markets by attempting to develop standardization and market monitoring.
"We don't agree with everything," she admits. "But we commend him [for] thinking about extremely complex issues in the most trying of possible times in the energy markets, [with] the fallout from the trading and related disasters from the Enron situation."
In addition, the sheer smorgasbord of responsibilities he manages is also impressive, says this attorney. Wood has had to manage political issues during election time, she notes, with a complicated situation in Congress and a world scene that forces FERC to act on infrastructure security. He has had to do that with a vacant seat on the commission-and the prospect of more retirements soon.
BUT IS THE CHAIRMAN SPREADING HIMSELF TOO THIN?
Supporters and critics alike worry that Wood may be trying to take on too much. Certainly, the release of the SMD NOPR, the generation interconnection NOPR, and market monitoring initiatives has made many business executives optimistic that the development of competitive energy markets will continue amid the current turmoil.
But many of these same business types fret that infighting among energy companies, transmission groups, and state groups could bog down Wood's latest initiative, in much the same way that the Order 2000 process was slowed down to a crawl. Furthermore, many executives question whether his initiatives can be implemented on parallel tracks-such as market design developing in parallel with infrastructure security, market monitoring, and Western contract talks. Many of these initiatives will be defined by the other initiatives, executives say.
"Decisions on SMD will inform infrastructure security, as decisions on infrastructure security will define the operation of transmission, markets, and market monitoring. Can you move on all of these simultaneously?" asks one executive.
Of course, Chairman Wood seems all too aware of the pitfalls previous administrations have fallen into. A few months ago, in a conference call hosted by Prudential Securities with institutional investors, he acknowledged