The Power to Soothe California?

Bush picks a fence-mending pragmatist to fix the energy mess

On his final night as Texas' top utility regulator, Pat Wood III was serenaded at Scholz Garten, a beer joint near the Austin statehouse, by the staff of the Public Utility Commission. To the tune of California Dreamin', they sang: "Pat will save the keep blackouts away."

Apparently President Bush, who appointed Wood to the PUC in '95 and recruited him for the Federal Energy Regulatory Commission, thinks so, too. Sworn in on June 5, Wood is expected to be named chairman, supplanting conservative Curt Hebert Jr., who is closely tied to Senate Minority Leader Trent Lott.

FIRESTORM. On June 18, Wood may get his first chance to showcase his vaunted talents as a consensus-builder: At an unscheduled meeting, FERC will discuss expanding its Apr. 26 "bid cap" on electricity generators selling to California. While not the same as rigid price caps, bid caps place limits on the prices that energy suppliers can offer to municipalities and companies. Such caps are now in place in California during emergencies; FERC could put them into effect at all times and throughout the Western power grid. A similar regime in Pennsylvania has helped drive down prices.

Such a decision would help calm the political firestorm in California, where Governor Gray Davis is threatening to sue FERC over its refusal to cap power prices. Already, Bush has designated Wood--not Hebert--as his liaison to the state. Davis, who has a frosty relationship with Hebert, calls Wood "a kindred spirit." Says Ralph Cavanagh of the Natural Resources Defense Council: "FERC has had an adversarial relationship with California, but [Wood] will change the whole dynamic."

California's crisis has put the usually obscure FERC, charged with ensuring electricity rates are "just and reasonable," in the hot seat. Wood's challenge is to rise above the fray. "I'm kind of shocked at how this whole California thing has turned into a Democrat-versus-Republican issue," Wood says. "I hope we'll defuse some of that."

Wood oversaw big changes in Texas' electricity and telecom markets. In 1997, when Texas' utilities were resisting deregulation, Central Power & Light of Corpus Christi went to the PUC seeking an 8% rate hike. Wood instead ordered a rate cut of 8%. That decision endeared him to consumers and "scared the hell out of the utilities," recalls state Senator David Sibley, a Waco Republican. So far, Wood, who helped encourage the use of wind power in Texas, isn't making any promises on price caps--but neither is he taking "any tool off the table."

By Laura Cohn in Washington

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