Then Enron imploded. Energy traders like Reliant Resources admitted they had likely conducted bogus power trades against company policy. Execs at Enron and at El Paso Corp. committed suicide as the scandalous allegations spread. And in California, Democrats chastised Wood for not being aggressive enough in his investigation of possible market manipulation of Western power prices in 2000-01.
It was enough to give pause to any devoted free-marketer. And on June 4, Wood abruptly changed his mind -- threatening to revoke power traders' ability to charge whatever price the market will bear and instead dictate power prices from Washington. It was as if Dr. Dereg had suddenly transformed himself into a regulator with fangs bared.
ROILING THE MARKET. The move has certainly grabbed the energy industry's attention. In an official FERC order, Wood charged that four companies -- El Paso Electric, Portland General Electric, Avista, and Williams Energy Marketing & Trading -- weren't fully cooperating with his agency's investigation. The order requires the firms to provide additional details of their trading activities within 10 days.
In the case of Williams, FERC took issue with its contention that it could neither confirm nor deny whether it exported power from California. Williams responded by saying it will "voluntarily" comply with FERC's request and will continue to cooperate. "Williams has not manipulated the Western market," Williams Energy CEO William E. Hobbs insisted in a statement.
Other industry officials expressed concern that FERC's move would add even more uncertainty to the market -- a worry reinforced by a drop in energy-sector stock prices. At a time when questions about energy-market trading are growing daily, Wood shouldn't add to the industry's woes, energy representatives fume. "FERC has to be vigilant, but it also has to be careful," says one energy lobbyist. "This could send a shudder through the power markets."
BIG STICK. That's not how California Democrats and West Coast energy officials see it. They feel vindicated, after imploring FERC last year to take away power-trading outfits' ability to set their own rates. Their pleas went unheeded then, but now "FERC is trying to show market participants that it's taking this investigation seriously," says Anthony Ivancovich, senior regulatory counsel at the California Independent System Operator, which runs the state's wholesale power grid. "FERC is holding a very large and very important stick over their heads." Wood declined to comment for this story.
Wood isn't the only reluctant Bush appointee to raise a stick to Corporate America in recent months. In this post-Enron era, Securities & Exchange Commission Chairman Harvey Pitt has been under intense pressure to crack down on the accounting industry, which he long represented in Washington. Once the cloud over the energy market lifts, Wood can still go back to his original agenda of trying to inject new market dynamics into energy pricing. But in the post-Enron era, that's not a sure bet anymore. By Laura Cohn in Washington