FERC Nominee to Cantwell: Will Support Authority to Pursue Illegal Energy Market Manipulation
Nominee pledges to uphold Cantwell-written provision that enabled record $410 million settlement with JPMorgan
WASHINGTON, D.C. – Just months after a record $410 million market manipulation settlement with JPMorgan Chase, the nominee to head the Federal Energy Regulatory Commission (FERC) committed today to continue to use the Commission’s authority to crack down on illegal energy market manipulation that can drive up energy costs for consumers.
During today’s Energy and Natural Resources hearing, U.S. Senator Maria Cantwell (D-WA) also secured commitments from administration nominees to work on projects important to Washington State. The Deputy Secretary of the Interior nominee, Michael L. Connor, committed to work with local stakeholders to find a funding source for the Yakima River Basin Integrated Water Resource Management Plan. Dr. Elizabeth Robinson, the nominee for Department of Energy Under Secretary for Management and Performance, told Cantwell she would work with Energy Secretary Ernest Moniz to examine plans to separate Hanford’s defense nuclear waste from civilian waste.
FERC Chairman nominee Ronald Binz told Cantwell today that he would make it the ‘primary goal’ of the commission to protect consumers, including protecting ratepayers from unjust and unfair rates and policing manipulation in the electricity and natural gas markets.
In the aftermath of Enron’s schemes that cost Washington ratepayers billions, Cantwell authored an amendment to the Energy Policy Act of 2005 that strengthened FERC’s authority to investigate and punish energy market manipulation. In July, Cantwell praised the record $410 million settlement that FERC finalized with JPMorgan Chase over the bank’s manipulation of electricity markets in California and the Midwest. That settlement followed FERC’s order on July 16, 2013, directing Barclays to pay $470 million in unjust profits and civil penalties for manipulating West Coast power markets.
Cantwell asked Binz if he would continue to use federal law to pursue additional manipulation cases.
Video of today’s hearing available here.
Senator Cantwell: “Mr. Binz, thank you for your willingness to serve. I’m very excited about your nomination. I wanted to ask you if you will uphold the Power Act as it’s written – including just and reasonable rates. And its anti-manipulation authority that was given to the commission?”
Mr. Ronald J. Binz, Commissioner of the Federal Energy Regulatory Commission nominee: “Yes Senator, I will. That’s the primary goal of the commission is to protect consumers, to ensure that rates are just and reasonable and to the extent we have devolved that determination to marketplaces we need to ensure that those markets are fair.”
Cantwell responded: “The FERC has many things to carry out and certainly in this area of market manipulation has played a key role in trying to keep energy markets from being out of whack. And certainly impacting everyone from consumers to businesses that depend on those affordable energy rates. I am a little worried that some of my colleagues might hold up your nomination and leave the FERC at the end of the year with a 2-2 person board and somehow get stymied on your overall functions and responsibilities. So I hope we can make progress in getting a full FERC and preserving the Power Act, which is the crux of the responsibility at FERC.”
Following Cantwell’s statements, Chairman Wyden praised the work she had done in laying the groundwork for FERC to stop energy market manipulation.
Chairman Wyden: “The Senator from Washington as usual makes important points. And no one has done more on this market manipulation front to set in place new efforts to fight it than the Senator from Washington.”
The 2005 Energy Bill also contained Cantwell’s provision that prevented a bankruptcy court from forcing Snohomish Public Utility District (PUD) and its customers to pay millions of dollars in termination fees for electricity that was never delivered. This measure reaffirmed FERC’s authority to decide whether charges related to manipulated power contracts could be deemed invalid.
During the hearing, Cantwell also secured a commitment from the nominee for Deputy Secretary of the Interior, Mr. Michael L. Connor, that the Administration would work on funding the Yakima River Basin Integrated Water Resource Management Plan. In 2012 the U.S. Bureau of Reclamation endorsed the Plan put together by a diverse group of stakeholders to address the needs of the Yakima River Basin. Cantwell and Connor – then Commissioner of the Bureau of Reclamation – joined then-Secretary of the Interior Ken Salazar in Yakima to meet with local stakeholders about the plan in 2011.
Senator Cantwell: “Mr. Connor, thank you for your interest in the Yakima Basin Water Project. I’m hoping that’s something you will continue to support as Deputy Secretary of the Department of the Interior?”
Mr. Michael L. Connor, Deputy Secretary of Interior nominee: “Absolutely Senator, it’s a great collaborative program with all the different stakeholders have put together, a good plan. It’s a long-term effort and we recognize that but we intend at the Department of Interior and all of our different areas to keep working with those folks in implementing that plan.”
Senator Cantwell continued: “I’m hoping that you will work with us on finding a funding source as well?”
Mr. Michael L. Connor responded: “Yes Senator, happy to do that.”
Also at today’s hearing the Under Secretary of Energy nominee, Dr. Elizabeth Robinson, pledged to work on resolving the issues of waste disposal at Hanford. Robinson’s position was created by Energy Secretary Ernest Moniz to handle administrative duties at the Department of Energy and also run the Office of Environmental Management, with oversight over Hanford.
Senator Cantwell asked: “I wanted to ask you about reducing the footprint at Hanford – which is a big part of what is trying to be done at this point in time. And a commitment to look at this separating of civilian and military waste is one idea. So I’m looking to see whether you will commit to working with Secretary Moniz on looking at that as an issue of making sure the waste once it’s cleaned up at Hanford and the process of the vit plant is able to be moved out?”
Dr. Elizabeth M. Robinson replied: “Yes, the issues at Hanford are very complex and very important. And as you mentioned – I grew up in Seattle. And certainly if I’m confirmed I’m deeply committed to working out the issues at Hanford – both short and long-term. And reducing the footprint and working with Secretary Moniz on the long-term disposition of the waste will be a top priority.”
Secretary Moniz visited Hanford on June 19, 2013, after he committed to Cantwell that he would visit if confirmed. Moniz was sworn in as the 13th Energy Secretary on May 21. During Moniz’s nomination hearing, Cantwell secured his commitments to consider the separation of defense nuclear waste and ensure adequate funding for Hanford cleanup.
A full transcript of the hearing follows:
Senator Cantwell: Thank you Mr. Chairman for having this hearing. I too would like to congratulate Dr. Robinson on your nomination and thank you for all your hard work. We are proud of you with your Northwest background. I don’t know if that’s what you were referring to about your special interest in waste cleanup but we certainly appreciate someone with a Northwest perspective bringing that urgency and attention to the Department of Energy. And I wanted to ask you about reducing the footprint at Hanford – which is a big part of what is trying to be done at this point in time. And a commitment to look at this separating of civilian and military waste is one idea. So I’m looking to see whether you will commit to working with Secretary Moniz on looking at that as an issue of making sure the waste once it’s cleaned up at Hanford and the process of the vit plant is able to be moved out? Because as it stands right now we don’t have a plan when that vitrification will actually happen – a destination site for that processed material.
Dr. Elizabeth M. Robinson, Under Secretary of Energy nominee: Yes, the issues at Hanford are very complex and very important. And as you mentioned – I grew up in Seattle.
Chairman Wyden: She went to school in Portland.
Senator Cantwell: We think of Reed College as a regional institution. That just happens to be on the other side of the Columbia.
Dr. Elizabeth M. Robinson: And certainly if I’m confirmed I’m deeply committed to working out the issues at Hanford – both short and long-term. And reducing the footprint and working with Secretary Moniz on the long-term disposition of the waste will be a top priority.
Senator Cantwell: Well, one of these ideas that has come up in a recent commission that we had – that was participated on with our past chairman Senator Domenici – one of the issues they looked at was the fact that when you are trying to answer all these questions as it relates to commercial waste. It adds an additional layer and burden, but if you separate the military waste we might get an answer on what to do about the Hanford waste in a much more rapid fashion. And so Secretary Moniz is working on that issue and the commission said it should be looked at and so we want to see that given focus too.
Dr. Elizabeth M. Robinson: I agree and Secretary Moniz being a member of the commission – you’re referring to the Blue Ribbon Commission?
Senator Cantwell: Yes.
Dr. Elizabeth M. Robinson: Secretary Moniz is very well positioned to move this issue forward and I look forward to supporting him on that.
Senator Cantwell: And just a cautionary note. Since I have been involved in energy issues at Hanford I think every Secretary and every person that comes in looks at the amount of money we are spending on cleanup, always suggests something that they think will be a shortcut. It ends up not being a shortcut and we end up spending more money. So I would hope you would look at the history of that and the challenges. Mr. Connor, thank you for your interest in the Yakima Basin Water Project. I’m hoping that’s something you will continue to support as Deputy Secretary of the Department of the Interior?
Mr. Michael L. Connor, Deputy Secretary of Interior nominee: Absolutely Senator, it’s a great collaborative program with all the different stakeholders have put together, a good plan. It’s a long-term effort and we recognize that but we intend at the Department of Interior and all of our different areas to keep working with those folks in implementing that plan.
Senator Cantwell: We’ve had two droughts and its cost us something like $335 million in economic damage. So I’m hoping that you will work with us on finding a funding source as well?
Mr. Michael L. Connor: Yes Senator, happy to do that.
Senator Cantwell: Great. And Mr. Binz, thank you for your willingness to serve. I’m very excited about your nomination. I wanted to ask you if you will uphold the Power Act as it’s written – including just and reasonable rates. And it’s anti-manipulation authority that was given to the commission?
Mr. Ronald J. Binz, Commissioner of the Federal Energy Regulatory Commission nominee: Yes Senator I will. That’s the primary goal of the commission is to protect consumers, to ensure that rates are just and reasonable and to the extent we have devolved that determination to marketplaces we need to ensure that those markets are fair.
Senator Cantwell: Thank you. I guess to me, Mr. Chairman, that’s the crux of this nomination and this question. It’s like the time I spent on the Judiciary Committee. It really didn’t matter to me what the personal opinions of judges were. It’s whether they are going to uphold the law and the statute. In this case my main interest in Mr. Binz is whether he’s going to uphold the Power Act and in just and reasonable rates. I am a little worried that some of my colleagues might hold up your nomination and leave the Federal Energy Regulatory Commission (FERC) at the end of the year with a 2-2 person board and somehow get stymied on your overall functions and responsibilities. So I hope that that won’t happen. Because the FERC has many things to carry out and certainly in this area of market manipulation has played a key role in trying to keep energy markets from being out of whack. And certainly impacting everyone from consumers to businesses that depend on those affordable energy rates. So I hope we can make progress in getting a full FERC and preserving the Power Act, which is the crux of the responsibility at FERC.
Chairman Wyden: The Senator from Washington as usual makes important points. And no one has done more on this market manipulation front to set in place new efforts to fight it than the Senator from Washington and I appreciate your comments.
Mr. Ronald J. Binz: Senator if I could just add. Not only is it the customers and businesses who rely on the power – it’s the competitors in those marketplaces that are harmed by this. We need a vibrant industry competing to sell electricity. And to the extent that manipulation hurts the other honest players in that market we’ve done harm too.
Senator Cantwell: Thank you.
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