Senators Call for GAO to Monitor FERC Restructuring

Thursday, June 20, 2002

                WASHINGTON - Governmental Affairs Committee Chairman Joe Lieberman, D-Conn., and Senator Jean Carnahan, D-Mo., asked the General Accounting Office (GAO) Thursday to monitor efforts by the Federal Energy Regulatory Commission (FERC) to improve its oversight and enforcement capabilities.  The Senators’ request follows a GAO report that found FERC currently lacks the basic capabilities and staff necessary to ensure “just and reasonable” prices for energy consumers.  Following is text of the letter:

June 20, 2002

Mr. David M. Walker
Comptroller General of the United States
U.S. General Accounting Office
441 G Street, N.W.
Washington, D.C. 20548

Dear Mr. Walker,

                We want to commend the General Accounting Office for its June 14, 2002 report to us concerning the Federal Energy Regulatory Commission’s (FERC) oversight of the
nation’s energy markets.  Although FERC has a statutory obligation to ensure that prices for wholesale natural gas and electric as well as energy transportation services are just and reasonable, GAO’s report found that  FERC does not currently have the capability to meet this obligation.  The GAO report makes an important contribution to understanding the role and responsibilities of FERC in the current environment where both consumer and investor confidence have been shaken by the failure of energy markets in the western United States, the financial collapse of the nation’s largest energy trader – Enron Corporation, and the disclosure of questionable trading practices by some of the largest energy companies in the country.  We hope that FERC will heed the GAO’s recommendations and move expeditiously to correct this egregious situation.

                In January 2002, during the GAO’s investigation,  FERC announced that it was initiating yet another effort to establish the capability to oversee competitive energy markets within its jurisdiction.  The agency’s record, as documented by GAO, indicates that FERC has failed to take even the most basic steps towards ensuring success in this endeavor, such as securing authority to hire and retain employees with critical skills.  Consequently, we are requesting that GAO monitor and report to us within the next 12 months on: (1) FERC’s implementation of the report’s recommendations and (2) FERC’s progress toward establishing effective market oversight and enforcement capability, including but not limited to the establishment of the new Office of Market Oversight and Investigation.

                Thank you for your continuing assistance in this matter.  If you have any questions concerning this request, please have your staff contact David Berick of the Committee’s majority staff or Amy Barber of Senator Carnahan’s staff.

                                                                                          Sincerely,

               Joseph I. Lieberman                                      Jean Carnahan
               Chairman                                                          Member
                                                                                                               

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Lieberman/President's Legislation Comparison Summary of S.2452