FERC's call for regional PUCs will force state regulators to declare their allegiance.
How will regulators re-engineer restructuring? That was the theme of the seventh annual convention of the Mid-Atlantic Conference of Regulatory Commissioners (MARUC). But while the theme may have been the re-engineering of restructuring, other regulators felt more inclined to discuss the "re-regulating of restructuring."
In fact, FERC's call for regional public utility commissions (PUCs) to be formed as part of its Standard Market Design has deeply divided state PUCs, and this could be a problem for the future of FERC's initiatives.
Although power increasingly has shifted to the FERC, none deny that state regulators can delay or even cripple the federal actions by a combination of pressure on their jurisdictional companies and with political lobbying in Congress with state delegations.
One person who has strongly voiced his support for regional PUCs is MARUC's newly elected president, District of Columbia Public Service Commission chairman Angel Cartagena. He has said, "As states increasingly consider entering into regional arrangements to address their respective energy needs, I am hoping that the MARUC member states will be pioneers. As most of our states belong to PJM, the development of a regional regulatory body to address common energy issues in the MARUC territory makes more sense every day."
But even with Cartagena's public support for regional initiatives, that didn't stop state regulators from putting FERC commissioner Nora Mead Brownell on the hot seat at the conference. State regulators wanted to know how FERC's orders requiring the formation of four or five regional transmission organizations were not federal preemption of state regulation.
A former Pennsylvania public service commissioner and recent president of the National Association of Regulatory Utility Commissioners, Brownell received a warm personal welcome, but her message was not as well received by many of the state regulators.
Brownell insisted that the members of the FERC were interested in, and attentive to, the concerns of the individual states and their state regulators with respect to how the lines for the four RTO's would be drawn. She reminded the audience that three of the four seated commissioners are former state regulators and have great familiarity with the roles and concerns of state regulators.
However, trying as best as she could, she could not square the circle by offering any compromise between the necessity that FERC commissioners consider regional or national objectives above the interests of individual states. FERC has a number of new initiatives that will continue to cause friction between the federal regulators and individual states, as federal law is incomplete in requiring the FERC to accomplish certain tasks with respect to a national electric transmission and wholesale competition policy.
Of course, some at the conference, such as Christine Tezak of Schwab Capital Markets, called on the state regulators "to get over" questions of whether the FERC's RTO and Standard Market Design initiatives are "pre-emptive," and work to make the new and necessary rules as effective and workable as possible. In closing comments she called the electricity title of the proposed energy bill "a neutral" from an investor perspective and gave 80-20 odds that an energy bill would not pass this session.
So far neither the Congress nor FERC has moved towards any regional regulatory model. Although both could do so. The Congress could introduce legislation and the FERC could implement long-standing joint-board authority under the Federal Power Act. Perhaps Cartagena has set the theme for next year's MARUC conference.
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