But the Energy Department’s watchdog said Wellinghoff disclosed confidential information about an investigation in the video snippet he should not have, and now the chairman who succeeded him is weighing whether to sanction him.
“We concluded that the disclosure…could threaten the integrity of FERC’s regulatory and enforcement processes,” Inspector General Gregory H. Friedman wrote in a June 4 management alert.
FERC, an independent agency that’s part of the Energy Department, is the government’s energy regulator, monitoring the electric grid, interstate electricity sales and energy markets.
Disclosing information during an investigation is not allowed under FERC rules. But if the enforcement case is resolved and regulators have issued a public order announcing the result, do the details stay sealed to the public?
FERC says yes. Wellinghoff says no.
“The inspector general is completely wrong,” the regulator-turned energy law attorney said in an interview. “This is inexplicable to me. The case was closed. The public has a right to see this.”
Wellinghoff said the case, against an energy trading firm accused of manipulating markets, was settled about three years ago, with the company agreeing to pay “hundreds of millions of dollars” to the government. FERC issued a public order. Wellinghoff showed the video snippet at a March 9 conference in California — in which a trader under investigation hems and haws when asked to confirm that he sent an incriminating e-mail –as a warning to the industry “not to act like this,” he said.
“This is no different from what became public from the Enron investigation,” said Wellinghoff, who stepped down as top energy regulator in 2013.
Wellinghoff said he no longer has the video because it was lost when his computer crashed.
His successor, Norman Bay, told the inspector general in a response to his report that he agreed the video should not have been made public.
He wrote, “I have directed appropriate senior commission staff to explore whether further steps are available to address this situation and to share their findings on that issue with me by Sept. 1.”
The inspector general also faulted FERC for having poor safeguards to prevent similar disclosures, and has recommended that the agency do more to prevent nonpublic information from getting into the hands of the public.
Wellinghoff was a plainspoken regulator who was at times a lightning rod. He raised alarms publicly about threats to the power grid from a potential terrorist attack, angering several lawmakers.
During his tenure, the agency’s enforcement office launched a series of high-profile investigations into allegations of market manipulation, fraud and tariffs.