Agency Without Friends

The federal agencies that regulate business have regularly been denounced from every part of the ideological spectrum--but none has vexed more people more consistently than the Federal Power Commission. One oil executive calls the agency "hidebound and bureaucratic"; another terms it "a miserable failure." Consumer advocates are just as vehement. "The FPC acts as judge and jury," says one. Congress is the most critical of all. Just before the November elections, the watchdog House Oversight Subcommittee accused the FPC of everything from "preconceived ideological" commitments to "a conscious disregard of its statutory duties." It bluntly concluded that the FPC is "the worst" of all the regulatory agencies.

Is the FPC really so bad? It does half of its job--regulating the rates charged by utilities for natural gas and for electricity that moves between states--without much trouble. The task in which the agency can please nobody is setting the wellhead price of natural gas produced in one state and burned in another. If the FPC holds down the price, gas producers (mainly big oil companies) berate the agency for not giving them an incentive to explore for new gas reserves. If the FPC lets prices rise, consumers set up a howl--and some 45 million American homes and businesses depend on the fuel for heat or power.

Trussed Chicken. The FPC is also a bureaucracy that has become entangled in federal red tape. Before the commission can begin to set a price for natural gas, it must consider the legal precedents that have been handed down in literally thousands of federal court rulings. Then it must consider the strictures of the Administrative Procedure Act and the National Environmental Policy Act. Finally, the agency must take into account the reaction of some 25 other federal bodies with some kind of jurisdiction over energy matters. In other words, the FPC has about as much room to maneuver as a trussed chicken.

What makes its job come close to being impossible, says FPC Chairman Richard L. Dunham, is the commission's "badly out of date" basic charter.

The agency is supposed to ensure ad equate supplies of natural gas while keeping the price low. That could be done in the days when gas was plentiful. But for several years now gas consumption has run far ahead of new discoveries, reserves have been dwindling fast, and every winter brings the threat of a shortage.

Last summer the FPC decided to en courage exploration for more gas by boosting the national price of 51-c- per 1,000 cu. ft. for the fuel. At the same time, the agency had to avoid giving the industry windfall profits on gas from long-producing wells. So the commissioners devised a complicated system of pricing gas, depending on when the fuel was committed to the interstate market.

The new prices per 1,000 cu. ft.: $1.42 for gas from wells found or tapped after 1974; $1.01 for gas from wells opened be tween 1973 and 1974; and 290 to 520 for all "older" gas.

Consumer groups, aghast at the size of the boost (it could have amounted to $1.5 billion), quickly filed court suits to upset this price schedule. The FPC then revised prices downward, partly by cutting the $1.01 figure to 93-c- and partly by reclassifying as "old" some gas first considered "new." So now the producers have gone to court in the hope of getting gas prices deregulated completely.

Price v. Supply. Obviously, none of this solves the FPC's dilemma. What could? Nothing short of abolishing the agency altogether, says Chairman Dunham. He favors creation of a single, streamlined federal agency to handle all energy matters, even though that would wipe out his own job. Since President-elect Carter has proposed the same thing, there is a good chance that the FPC will indeed disappear one of these days, unloved and unlamented. But unless Congress also resolves the question of whether to choose low prices or plentiful supplies, an energy superagency would only be handed the FPC'S task of reconciling the irreconcilable.

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