If federal regulators want to promote confidence in deregulated electricity markets, as they claim, perhaps killing an inquiry into whether Mid-Atlantic generation companies made excessive profits wasn't the best way to go.
Last week the Federal Energy Regulatory Commission completely ignored allegations that an unidentified generator reaped excess payments of $20 million. It disregarded evidence that parts of the wholesale electricity market -- which determines retail electric rates in Maryland -- lack the competition to prevent windfall profits and consumer abuse.
It refused to order hearings requested by officials in Maryland and a dozen other states who suspect their citizens are getting gouged.
Instead, it tinkered with the organization chart and patted itself on the back.
The FERC decision grows from accusations made in April by Joseph E. Bowring, the supposedly independent "market monitor" for the electric grid from New Jersey to North Carolina. Bowring created a furor by saying grid bosses interfered with his ability to blow the whistle on monopoly prices and excess profits when he sees them.
That's the most important part of his job. Under deregulation, Baltimore Gas and Electric and other utilities don't own generation plants anymore. They have to buy electricity on the open market, supposedly to spur competition and reduce prices. But the market isn't really "open." Hardly anybody has built generators in years, leaving all kinds of opportunities for existing plants to raise prices unchallenged.
To support allegations that his bosses at grid manager PJM Interconnection stifled his independence, Bowring gave FERC several examples. One involved the $20 million "excess payment."
Another allegation had to do with a part of the market in which "dominant suppliers" frequently had "the ability to exercise market power," he said in a sworn affidavit. Still another portion of the market was "uncompetitive," he said.
In each case, Norristown, Pa.-based PJM censored Bowring or interfered with his ability to present information to utilities or other stakeholders, he said. Maryland and other states immediately asked FERC to stop the muzzling, hold public hearings and allow the production of documents to shed light on his claims.
But FERC pulled a blanket over the whole thing. Instead of ordering hearings, it asked the states and PJM to settle their differences. This will probably happen, since PJM's top two executives resigned after Bowring complained and the grid manager says it wants to make nice.
But it leaves the identities, windfalls and techniques of the alleged profiteers in the dark. Incredibly, FERC didn't even acknowledge the allegations. FERC was about the only way this information was going to come out. Bowring can't just announce who's making suspicious profits; PJM's charter binds him to confidentiality outside certain venues.
And because FERC regulates wholesale electricity, any potential state investigation "is not a clear and easy path," said Maryland Public Service Commission Chairman Steven B. Larsen. The commission has no obvious authority over interstate commerce and questionable subpoena power outside Maryland. (It has, however, launched separate probes into Maryland wholesale electricity auctions and profits being made by BGE parent Constellation Energy.)
Bowring's lawyer didn't respond to a message left with his office. FERC, for its part, denies the case was about market power and outsize profits.
"It's all about the market monitor and his ability to monitor the market, not about whether there's a lack of competition in the region," said FERC spokeswoman Mary O'Driscoll. It recognized that Bowring clashed with his bosses and ordered a settlement that will increase his independence, she said.
Say a policeman thinks he sees a robbery but can't chase the suspect because of a flat tire. If FERC is the police chief, it fixes the guy's car a week later but never assigns another cop to investigate the break-in.
But FERC has never been aggressive about stopping larceny. Three years ago the 9th U.S. Court of Appeals blasted the agency for freezing while Enron and other power providers ripped off California consumers and for failing to seek refunds even after the misconduct became obvious. "With FERC abdicating its regulatory responsibility, California consumers were subjected to a variety of market machinations," the court said.
The resolution of the Bowring matter will "safeguard the integrity of PJM market operations," FERC Chairman Joseph T. Kelliher said in a prepared statement.
Hope that makes you feel better when you're paying your $400 BGE bill.