WASHINGTON – Responding to a report issued Monday by the Inspector General of the Department of Energy, Governmental Affairs Ranking Member Joe Lieberman, D-Conn., and Energy and Natural Resources Committee Member Maria Cantwell, D-Wash., condemned Federal Energy Regulatory Commission Chairman Pat Wood and Commissioner Nora Brownell for a series of secret phone calls they conducted with Wall Street analysts earlier this year.
In April, the Senators requested that the DOE IG investigate reports that Wood and Brownell had held a closed, password protected conference call with a handful of Wall Street analysts to discuss how the Commission was going to resolve matters related to the California and Western energy crises. Some of the analysts represented the companies that were parties to the FERC cases discussed on the call.
“The IG report confirms what we feared – that FERC, the energy consumers’ advocate, conducted secret phone calls with Wall Street analysts on a regular basis,” said Lieberman. “Apparently the Bush culture of serving corporations first and the American people second has tainted FERC’s integrity as well.
“Chairman Wood and Commissioner Brownell were wrong to engage in these calls. FERC’s job is to uphold the integrity of the energy markets and ensure just and reasonable energy rates for the American people, not scratch the backs of insiders. Right now, it looks like the agency gives an unfair advantage to some parties at the expense of others.”
Cantwell said: “The IG report confirms that FERC was doing more than just hobnobbing with Wall Street. FERC Commissioners were engaging in serious activities with serious consequences for Northwest ratepayers. These activities don’t even pass the smell test. In fact, they stink.
“FERC is feigning innocence and the Administration is buying it. I’ll tell you who isn’t buying it — Northwest consumers. But they are buying energy at outrageous prices. There’s no question in my mind that if these secret get-togethers aren’t illegal, they sure ought to be.”
In the call, Wood and Brownell were reported to have indicated to the analysts how they intended to rule in a series of cases involving billions of dollars in disputed, long-term electric power contracts signed at the height of the Western energy crisis in 2000-2001.
The DOE IG not only confirmed that the March 26, 2003, call had taken place, but also identified two other previously secret conference calls Wood and Brownell had with Wall Street analysts – one on February 20, 2003, and one on March 28, 2003. While concluding that Wood and Brownell did not appear to violate FERC’s own rules concerning communications about matters pending before the Commission, the DOE IG concluded that the Commissioners’ actions did raise “serious questions of fairness” in pending cases. On June 25, 2003, the Commission voted to uphold all of the contested long-term, energy contracts on a 2-1 vote, with Wood and Brownell in the majority.
Federal law generally prohibits agency officials from discussing pending proceedings outside of the formal adjudicatory process or prejudging a pending matter before it is formally decided.
Although the IG found clear evidence of secret contacts, he deferred to FERC’s own assertions about the meaning of its rules on the issue, concluding that the contacts did not break FERC rules despite their plain language to the contrary. The rule says that commissioners shall not “make, or knowingly cause to be made, to any person outside the Commission, any off the record communication.”
“I am perplexed at the IG’s decision to defer to FERC’s self-serving interpretation of this rule, an interpretation that is flatly at odds with the rule’s plain language,” Lieberman said. “I hope FERC will accede to the IG’s recommendation to engage in more transparent decision-making and will take steps to restore the public’s confidence in the fairness of its proceedings.”