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Ex-UNM Prof Helps Electricity, Gas Keep Flowing

Posted on: Wednesday, 28 December 2005, 18:00 CST

By James W. Brosnan BROSNANJ@SHNS.COM / (202) 408-2701

WASHINGTON -- Former University of New Mexico law professor Suedeen Kelly likes to describe the scope of her job here as "EGOD."

That's electricity, gas, oil and dams.

As one of three members of the Federal Energy Regulatory Commission, Kelly doesn't have the godlike, or even government, power to cut your heating or electric bill this winter.

But armed with tools from the energy law that was largely crafted by New Mexico Sens. Pete Domenici and Jeff Bingaman and approved earlier this year, Kelly hopes her agency can assure a steadier supply of natural gas and a more reliable electric grid that could keep prices down in the future.

When Congress finishes its job, it's often just the start of work for regulatory agencies.

The new energy law assigned 32 tasks to displaced Albuquerque resident Kelly and her fellow FERC members, Chairman Joseph Kelliher and Commissioner Nora Brownell. President Bush appointed all three, but Kelly fills a seat designated for Democrats on the commission, thanks to the influence of Bingaman, a Silver City Democrat. Provisions in the new law give the commission authority to:

Prevent blackouts through new standards for utility transmission lines and incentives for building new transmission lines.

Approve or disapprove utility mergers.

Identify corridors in the 11 Western states to locate natural gas and oil pipelines and electric transmission lines.

Speed up the approval process for new terminals at ports to handle tankers carrying liquefied natural gas.

Domenici, an Albuquerque Republican, recently praised the commission for issuing the first set of rules under the bill on time.

"The energy bill is a vast bill and there is a lot more work to be done, but we're making strong progress," said Domenici.

The impact won't be immediate, Kelly cautioned.

"The only way to ameliorate prices in the short term this winter is (by) decreasing demand through conservation," she said.

Kelly is "uneasy" about one step the commission is considering under its new powers.

To smooth out the peaks and valleys of natural gas supply, the commission this month proposed allowing natural gas companies to charge "market rates" -- whatever they can get -- for gas held in storage. "Since 1988, gas storage has increased only 1.4 percent, while demand for natural gas has risen 24 percent," Kelliher said.

"Last year, we saw record levels of gas in storage, yet we also saw near-record levels of price volatility. That clearly indicates we need more storage capacity."

Kelly said the commission has approved 40 new gas storage facilities since 1996 and allowed market rates for all but three. She worries about allowing companies to charge higher rates for gas held in storage where there is not a competing supplier. "This is an extraordinary step. The commission does not authorize any other monopoly that we regulate to charge market-based rates," Kelly said. After the FERC takes comments, she's hoping for a "fair and reasonable" final regulation, she said. Kelly also promises to keep the consumer in mind when the commission examines what are expected to be consolidations in the utility industry -- because of the repeal of the federal law banning mergers of electricity suppliers. This month, the commission approved the merger of two Eastern utilities, Duke Energy and Cinergy.

Kelly said the new law says the commission should not approve any mergers if there is an "adverse impact on competition."

Generally, however, Kelly is not seen as out-of-step with her Republican colleagues or the direction for more competition and less regulation.

"I don't sense any real tension in terms of direction," said Greg Williams, an attorney who practices before the commission. "They are all pretty much aligned."

Said Kelly: "Congress has said clearly in terms of energy policy it wants competition in the wholesale (energy) markets. And we all agree with that." Bingaman called Kelly a "great listener," adding she can "bridge differences between the commission and its critics, and among factions within the industry. For a commission that has had to deal with so many controversies in recent years, these are valuable, constructive skills to have." Bingaman was referring to the battle going on between the com

mission and Congress when Kelly joined the FERC a little more than two years ago.

She was first appointed to fill a vacancy in 2003 and then renominated and confirmed last year to a full five-year term that ends in 2009.

To spur competition in the electricity market, former Chairman Pat Wood was proposing to create powerful regional transmission organizations that would auction electricity by bid. State utility regulators feared a loss of authority.

Energy-rich utilities in the Southeast and Northwest, and lawmakers from those regions, said customers would have to pay to build transmission lines to ship power to energy-poor states in the Northeast and to California.

The idea died when Kelliher replaced Wood. This commission has "made it clear" that it isn't going to force utilities to join regional transmission organizations, Kelly said.

Source: Albuquerque Journal

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