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Enter Ron Binz

I’ve been writing this week about Obama’s war on America, the war that Obama has his heart in. If you’re going to fight a war, you need troops, and Obama has staffed his administration and supposedly independent regulatory agencies with loyalists. Enter Ron Binz.

This week Obama nominated Ron Binz, the former Chairman of the Colorado Public Utilities Commission (CoPUC), to be the Chairman of the Federal Energy Regulatory Commission. In keeping with many of Obama’s appointments, Binz is a far-left ideologue. It is undoubtedly what what endears him to Obama. If confirmed, Binz will predictably further the administration’s agenda to shut down low-cost baseload coal plants across the country in favor of expensive, low capacity wind and solar. The confirmation of Binz would accordingly portend bad news for electric rates.

Binz’s regulatory record carries a few wrinkles. As Chairman of the CoPUC Binz cowrote a state law with the utilities he was regulating. The law requires investor-owned utilities to shut down coal plants in exchange for the right to build their own natural gas plants. The law will shut down about 1,000 MW of coal-fired energy in Colorado. The baked-in rate increases will start hitting in earnest around 2017.

After the the bill passed the legislature, Binz then presided over the CoPUC case to shut the coal plants down. The Denver Post covered the outcome here. Surprise: Binz et al. made the necessary findings to shut down the plants.

Colorado law provides that commissioners should disqualify themselves “in any proceeding in which their impartiality may reasonably be questioned,” and should be removed by the governor should they “lend the prestige of their office to advance the private interests of others,” or “convey the impression that special influence can be brought to bear upon them.” Binz refused to recuse himself from the regulatory proceeding implementing the law he had helped draft. The Denver Post’s Vincent Carroll recalled the story last week:

It makes no difference whether Binz has [no] friends in the coal industry; for the Obama administration, that fact may very well be a plus. What matters is whether it was proper for Binz to help craft highly controversial legislation in 2010 whose implementation he would then, as a key regulator, be charged with overseeing in the midst of competing claims. The coal industry insisted it was not proper, and with good reason.

Binz didn’t merely offer an opinion about the practicality of this or that aspect of the fuel-switching bill when asked by lawmakers. Months before the 2010 legislative session began, he engaged in meetings with executives from the natural gas industry and Xcel Energy, as documents obtained under open records laws later revealed.

By early March 2010, he was even reassuring Xcel officials on how the commission would treat cost recovery under draft language — eventually crowing, “The eagle has landed. The commission and Xcel have agreed on language for cost recovery.”

So much for commissioners maintaining an image of impartiality in the discharge of their duties.

Binz’s ethical challenges were not limited to acting as a commissioner whose impartiality could reasonably be questioned. Binz also violated Colorado law by accepting a free trip to Houston sponsored by a natural-gas company. Binz, incidentally, while a board member of Common Cause, promoted the ethics law he violated as CoPUC chairman. Vincent Carroll adds a note regarding Binz’s love of travel:

The audit noted [that] one unnamed commissioner was so partial to junkets that it was “difficult for division staff to meet with him and ensure his preparedness for meetings and hearings.” Who was this nameless, globe-trotting commissioner? The auditor refused to comment, but suffice it to say no PUC honcho surpassed Binz’s travel blitz. In the 3½ years from June 2007 through November 2010, Binz spent about 200 days on the road. As I summarized his junketeering shortly thereafter, “In short, Binz spent the equivalent of at least one in four workdays at conferences, jetting to Greece, Jordan, Santa Monica, San Diego, Santa Fe, Whitefish (Mont.), Las Vegas, Hawaii, San Francisco, Amelia Island (Fla.), Park City, Seattle, Austin, Los Angeles, and numerous other hardship outposts.”

Binz was sufficiently tainted by the end of his term that Binz withdrew from consideration for reappointment and new (Democratic) Governor John Hickenlooper obliged. Binz has spent his time since leaving the CoPUC advocating that states shun coal and nuclear plants in favor of renewables because, he claims, renewables are less risky. He has at the same time been running hard to be nominated to FERC and this week he got his wish.

What damage can FERC do with Binz at the helm? A lot. It can socialize the costs of giant transmission projects to carry wind and solar to California, inflict new “externality” costs on coal in restructured markets to hasten coal’s demise, and so on. Binz’s nomination fits in perfectly with Obama’s declaration of war on coal this week.

Unless Senators Manchin and Landrieu vote against Binz in committee, or some Senator places a hold on the nomination, Binz will be working to hike your electric bill and make the United States less competitive for any business that uses energy. All in a good cause, of course.

UPDATE: A reader with relevant expertise questions “how FERC can impose (inflict, in your words) externality costs in restructured electric markets. FERC oversees wholesale electric markets.” The reader cites FERC Order 1000, which allows for socialization of transmission costs for “public policy” reasons. However, he points out, the socialization is based on “beneficiary pays.”

I would add that it will be difficult to socialize costs, but it is very much a live issue in FERC circles and Binz will surely work to socialize renewable-related transmission costs as much as possible. It also would be difficult to increase the costs of coal in restructured markets, but again it’s not impossible. Binz’s record shows that he has the will to power and little regard for the rules.

Our reader adds this important note: “Binz will be a disaster for FERC, but at least there are some decent Commissioners there – Tony Clark is truly impressive – and some very bright policy staff. So, he may be constrained somewhat. Your article fails to mention the damage he could cause on the gas and oil pipeline, reliability, and hydro relicensing aspects of FERC’s role. He could do tremendous damage on those.”

I invite knowledgeable readers to weigh in in the comments.

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