FERC seeks tools to stamp out Enron-like abuses

The Federal Energy Regulatory Commission, long derided as a paper tiger by West Coast critics, wants to put some teeth into its enforcement ...

The Federal Energy Regulatory Commission, long derided as a paper tiger by West Coast critics, wants to put some teeth into its enforcement efforts. At a recent meeting, two FERC members — clearly outraged by tape recordings of Enron Corp employees bragging about gouging California consumers — made an unexpected public plea for new powers to clamp down on abusive trading and other bad conduct by energy companies.

‘‘It’s clear that we have to have stronger civil penalties and criminal penalties,’’ said Commissioner Joseph T. Kelliher, a Republican, ‘‘and only Congress can do that.’’ Or, as Commissioner Suedeen G. Kelly, a Democrat, put it: ‘‘There is a will, but there is no way.’’

Such talk is encouraging to officials who have been frustrated by what they see as FERC’s tepid response to evidence of widespread ‘‘gaming’’ in Western power markets during the energy crisis of 2000-01.

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But questions remain about what the nation’s energy cop would do if it suddenly were given more potent weapons — and whether it makes the most of the law enforcement tools it already has.

Many argue that the 1935 Federal Power Act gives the panel all the authority it needs to protect the public by conferring on FERC the authority to keep electricity rates ‘‘just and reasonable.’’

Yet many politicians, including some who have not hesitated to lambaste the energy commission, are joining in the appeal to give the regulators more muscle. Otherwise, they warn, the long-term consequences could prove dire.

The problem, some say, is that the Federal Power Act is an outdated law more suited to a time when old-line utilities controlled the marketplace than to an era when wholesale competition can unleash chaos.

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FERC members also contend that the current laws don’t give the panel the enforcement tools expressly granted to other regulatory agencies.

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission are authorised to slap violators with fines amounting to triple the damages for certain offenses. Those regulators also can impose lifetime bars on defendants — in effect banishing them from the industries and activities in which they misbehaved.

Advocates for strengthening FERC say the threat of much larger penalties — going far beyond the return of disputed profits — would be a more intimidating weapon to hold over wayward energy suppliers.

‘‘If it’s important enough for pork bellies, and whatever commodities are traded, I think it’s important enough for FERC’’ to have greater authority to penalise wrongdoers, Commissioner Kelliher said, alluding to powers held by the commodity futures commission.

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Feinstein is backing a proposal that would give FERC the ability to impose civil penalties of as much as $1 million a day and hike the punishment for defying the panel’s rulings to $25,000 a day from the current daily cap of $500.

However, these and other FERC-related proposals are included in an energy bill that is bogged down in Congress, its prospects uncertain.

—(LAT-WP)