Former FERC chairman warns California on transmission

By Ann de Rouffignac
OGJ Online

HOUSTON, Feb. 15�Former Federal Energy Regulatory Commission Chairman James Hoecker warned California officials not to expect federal regulators to look the other way, if the state pursues a takeover of the electricity transmission system belonging to the investor-owned utilities.

�If California wants to create a state-owned wires company without the FERC, they have another think coming,� Hoecker said at the Cambridge Energy Regulatory Commission energy conference Thursday.

California lawmakers and Gov. Gray Davis are working on a draft of a bill for the state to buy the transmission as part of a solution to the immediate crisis. The utilities would receive a huge cash infusion to pay off past debts and buy power.

But Hoecker was adamant federal regulators have a role to play in addressing the energy crisis enveloping that state. He disagreed with Bush Administration leanings which suggest California is responsible for its own problems and should solve them with little federal help.

�This is a national problem and �west-wide� problem with consequences for the whole country,� Hoecker said.

Hoecker conceded during his term as chairman that he didn�t see the problems in California coming.

The situation resulted from a unique set of circumstances, and few people anticipated these events would come together the way they did, he said.

He called for leadership from places outside the capital of California.

�California should not be allowed to go it alone by other western states or federal regulators,� he said.

Hoecker said that many wholesale energy supporters are �purists� when it comes to the market and regulatory intervention. Many market participants believe that �too much regulation� caused the problem.

�Get over it,� he admonished the audience. �Regulation will be present for a time longer.�

At the same time, regulators must understand the markets, take steps to curb excesses, and know when to get out of the way, he said. Hoecker warned regulators must make sure a California solution is socially acceptable because people are �frightened.�

He reiterated his longstanding support for large regional transmission organizations to make the wholesale market work more efficiently. The FERC needs, however, more uniform jurisdiction in the country, he argued. With jurisdiction over just 67% of the nation�s grid resources, FERC will have trouble fulfilling its mandate to insure open access to transmission.

Hoecker also called on Congress to give FERC the authority to enforce reliability standards across the country. He said standards could differ in individual areas, but somebody has to make sure they are enforced.