Successful energy market development means understanding new subtleties and nuances.
William F. Hederman is director of the Office of Market Oversight and Investigations at the Federal Energy Regulatory Commission. These remarks are based on his presentation at “Ethics and Changing Energy Markets” in October 2004 and on the discussions at that conference. (Note: the opinions expressed are personal views and not the official views of the Federal Energy Regulatory Commission or the United States government.)
A recent McKinsey article proclaimed, "More progress has been made improving the governance of U.S. corporations during the past couple of years than in the several decades preceding them" (McKinsey Quarterly, April 15, 2004). Yet, revelations from the disgraceful behavior associated with Enron and related events continue to surface and confuse the issue of what is needed today to move energy markets forward.
Ethics will play an essential role in any energy market in which restructuring succeeds. Federal Energy Regulatory Commission Chairman Pat Wood created our Office of Market Oversight and Investigations in response to the California market chaos he encountered when he became FERC chairman. Our assignments include cleaning up some of the remnants of the California mess and serving as the commission's "cop on the beat" to ensure market participants behave according to commission rules ("macro-level" ethical considerations). I am happy to report that the broad chaotic disorderliness that accompanied the California meltdown from 2000 to 2001 has ended.