Bush Selects Ex-Texas Regulator to Head FERC

President Bush on Tuesday named Patrick H. Wood III, a former Texas utility regulator with a pragmatic, hands-on style, to be the next chairman of the Federal Energy Regulatory Commission.

Akin to a national utilities commission, FERC has the power to set wholesale electricity rates, making it a key player in California’s efforts to recover from the energy crisis. But the commission initially took a hands-off approach, drawing bitter criticism from state officials.

In June, FERC finally imposed price limits throughout the West, while also ordering generators to sell any available power when needed. Wood--then a new commissioner--helped create the consensus for that decision, which has been cited for helping to ensure an unexpectedly calm summer.

Wood is an advocate of electricity deregulation who nonetheless believes that markets must be closely policed and government should intervene if consumers aren’t benefiting.

“Pat Wood is someone who accepts the proposition that markets have to be constructed,” said Mark Cooper, a regulatory expert at the Consumer Federation of America and frequent FERC critic. “He understands that markets are not born as mature adults--they can go very wrong and when that happens, they have to be disciplined.”

Wood said Tuesday that his main goal will be to help deregulated electricity markets take root in all 50 states. About half the states have taken steps toward deregulation, but many are holding back in view of California’s problems. Wood said he would also ask Congress for authority to set up regional market monitoring offices around the country.

“My top one priority is to get competitive energy markets in this country,” Wood said. “That is what I am about. That is what I was picked for. To do that, we need to be credible, adept and open-minded. . . . People may not care about who we are, but they do care about what happens as a result of what we do.”

Sen. Dianne Feinstein (D-Calif.), a leader on energy issues in the state’s congressional delegation, welcomed Wood’s appointment. “As a sensible problem-solver, Pat Wood places practicality over ideology,” Feinstein said in a statement. Wood “will hopefully give some needed teeth to an agency that for far too long has delayed in coming to the aid of California.”

Since being confirmed as a commission member by the Senate in late May, Wood, 39, has taken an increasingly active role at the agency. A longtime political ally of the president, Wood was immediately chosen by Bush to be his special intermediary to California Gov. Gray Davis.

Wood also made common cause with FERC Commissioner William L. Massey, a Democrat who for months had been the lonely advocate of a more activist role. Wood’s arrival shifted the balance of power on the five-member commission toward those who favored intervention to head off further problems in the West.

When FERC Chairman Curtis L. Hebert Jr. announced last week that he would resign at the end of the month, it cleared the way for Wood’s long-expected promotion. Separately, Entergy, a New Orleans-based energy conglomerate, announced Tuesday that Hebert will join its ranks as a senior lobbyist.

Industry officials also said they were pleased with Wood’s appointment, which will take effect Sept. 1 and does not require further Senate action.

As chairman, Wood will set FERC’s agenda and oversee a staff of 1,200 with a budget of $175 million. But his honeymoon may be short-lived, as he faces resistance on several policy fronts.

For example, with regard to California, FERC is unlikely to order anything like the $9 billion that Gov. Davis is demanding in refunds from power producers.

And the agency is on a collision course with the governor over the independence of the nonprofit entity that operates the state’s electric grid. Under a new California law, Davis appoints the governing board of the California Independent System Operator. But FERC policy requires the board to be insulated from political control.

“Stay tuned,” Wood said. “That’s not anything I’m willing to discuss at this point.”