Ferc Follies

The Monday Pb editorial inward the Wall Street Journal on a FERC (Federal Energy Regulatory Commission) floor is revealing on the increasingly politicized nature of the American Regulatory State. Pulling the FERC floor out of the editorial's larger point,

For 10 years Mr. Van Scotter has run a newspaper manufactory inward the northern Maine town of Lincoln, population 3,000. [FERC Director] Mr. Bay accuses Lincoln Paper together with Tissue of having manipulated inward 2007-08 a federal plan meant to promote unloosen energy conservation.... Lincoln Paper may move liable for a $5 1000000 civil penalization together with $379,016.03 inward disgorgement, addition interest.

... Yet Lincoln Paper broke no known law.... 

Lincoln Paper chose to participate inward "demand response" on the New England electrical grid, where large ability users were paid for the electricity they didn't use...Lincoln Paper had an aging steam-powered generator on site that supplied a minority of the mill's unloosen energy needs together with took the residuum from the regular grid. Mr. Bay claims that Mr. Van Scotter intentionally ran this generator less than he usually would when the baseline was beingness created. Then he ramped the generator dorsum upwards to arrive appear equally if he was drawing less unloosen energy off the meter together with therefore stealing the demand payments. ...

But...FERC never defined "baseline" together with made no rules most the correct mode to laid upwards i or how equipment should move operated during the criterion period.

So how tin Mr. Van Scotter move accused?

As Mr. Bay lately told the Senate inward a letter, "the absence of a violation of marketplace rules is non a defence strength to marketplace manipulation..

The mag calls this "Orwellian."  Catch-22 mightiness move better. Under a FERC program, you lot tin larn federal coin for cutting unloosen energy below a baseline. How produce nosotros compute the baseline? We won't enjoin you. But nosotros tin come upwards after you lot after if nosotros don't similar what you lot did.

I constitute the final tidbit the most revealing.

...Lincoln Paper is entitled to no regain during FERC investigations or fifty-fifty to know the identity of its accusers. Seven of the nine deposed witnesses stay anonymous nether Mr. Bay's rules. He wants to play prosecutor, jury together with executioner.

In the regulatory state, rights that nosotros accept had since most the Magna Carta dissolve.

With "baseline" undefined, for sure lots of companies made, er, interesting computations to larn Federal dollars. How did Mr. Van Scotter attract attention? Who did he non pay off, or produce a favor for? Did he plough over to the incorrect political activity committees? Did he say something impolite most the FERC? The secrecy amongst which the FERC operates is an opened upwards invitation to this sort of abuse. (See, IRS.)

Keeping this sort of problem at bay is how companies less "unsophisticated inward the ways of Washington" directly move -- run across large banks, wellness insurers, unloosen energy companies.  Long together with vague laws, authorizing longer together with vaguer regulation, amongst few of the rights of the defendant that legal proceedings involve, allow politically-appointed regulators process companies amongst capricious discretion.  Threatening this sort of problem is how Washington gains political support. Smart companies play along.

Fortunately, inward this case, at that topographic point is a legal remedy, though ho-hum together with expensive. Smart journalism withal serves its disinfecting role, equally the existence of the editorial attests. And eventually, i hopes, an outraged electorate volition rising to demand alter i time it understands what "regulation" has become.