August 27, 2003   REPORT FAULTS FERC OVERSIGHT OF ENERGY MARKETS Lieberman: After a Decade, FERC Still At Starting Gate   WASHINGTON - The capability of federal energy regulators to oversee the electric and natural energy markets remains lacking in a number of critical areas, according to a new report released today by Governmental Affairs Committee Ranking Member Joe Lieberman, D-Conn. The General Accounting Office report on the Federal Energy Regulatory Commission’s (FERC’s) ability to monitor and oversee the energy markets in an effective way found that the agency’s market oversight office has neither a formal operational plan nor a strategy for systematically auditing compliance with FERC’s regulations and market rules. In fact, the agency has yet to determine the specific types of market data it needs to monitor the markets nor has it established a way to obtain critical market data for the diverse regional markets it oversees. “The Northeast power blackouts earlier this month serve as a reminder of how important electricity is to our economy,” Lieberman said. “It’s extremely troubling to me that - after a decade of leading the charge to deregulate the electricity and natural gas markets, after the experience of the devastating electricity crisis in California and the Western U.S. during 2000 and 2001, and after the Enron debacle with all that it has taught us about manipulation of energy markets - FERC is still at the starting gate when it comes being able to prevent these problems. Another year has gone by and FERC is still not capable of effectively protecting consumers.” For more than a decade, FERC has been the principal force behind the transformation of the energy industry from government-regulated monopolies to market-based competition. The GAO report is a follow-up to a previous June 2002 GAO report into FERC's apparent inability to oversee energy markets that Lieberman and former Senator Jean Carnahan, D-MO, requested during the 2000-2001 electricity crisis in California and the Western states. Today’s report found: • FERC has not established working definitions of market abuse that it will use when monitoring the energy markets; • FERC’s market monitoring unit does not have access to important, real-time data about energy prices and operation of the electric grid that are necessary to determine whether energy markets are being manipulated; • FERC has not determined how much it will, or can, rely upon the regional market monitoring units associated with regional electric transmission organizations to monitor electric markets, or how it will obtain market data in major parts of the country where these regional electric transmission organizations do not exist; • FERC’s market oversight office is still not adequately staffed, especially at senior management levels; and • FERC lacks staff with “market expertise.” The full GAO report is available at http://www.gao.gov   ###   Printable Version   Related File(s)   GAO Energy Report (1.0 MBs) « previous Press Release next Press Release »
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