Federal Power Commission

Federal Power Commission. The Federal Power Commission was an independent agency of the United States Government created to coordinate federal hydroelectric projects and regulate the interstate aspects of the electric power and natural gas industries. Established by the Federal Water Power Act of 1920, it initially consisted of the Secretaries of War, Interior, and Agriculture. Its authority was significantly expanded during the New Deal era, most notably by the Public Utility Holding Company Act of 1935 and the Natural Gas Act of 1938, transforming it into a powerful economic regulator. The agency's functions were ultimately absorbed by the Federal Energy Regulatory Commission (FERC) following its abolition during the Jimmy Carter administration.

History and establishment

The commission's origins trace to the Federal Water Power Act of 1920, which sought to bring order to the development of hydroelectric projects on navigable waters and federal lands. Initially, the agency was an ex officio body composed of three cabinet members: the Secretaries of War, Interior, and Agriculture. This structure proved cumbersome, leading to the passage of the Rayburn Act in 1930, which reconstituted it as an independent regulatory commission with five full-time, presidentially appointed members. This change was part of a broader trend of creating expert agencies, such as the Interstate Commerce Commission and the Federal Trade Commission, to oversee complex industries. The Great Depression and the subsequent New Deal provided the political impetus for a major expansion of its regulatory scope beyond just water power.

Functions and responsibilities

The commission's primary functions evolved to include licensing and overseeing non-federal hydroelectric projects on navigable waterways and federal lands. Following key legislative acts, its responsibilities broadened to regulate the interstate transmission and wholesale sales of electricity, aiming to ensure "just and reasonable" rates. With the passage of the Natural Gas Act of 1938, its authority extended to the interstate transportation and sale for resale of natural gas, including setting rates for pipeline companies. The agency also played a role in the approval of mergers and security issuances within the industries it regulated, and it conducted investigations into industry practices. Its work often intersected with that of other bodies like the Securities and Exchange Commission, particularly regarding utility holding companies.

Regulatory authority and major cases

The commission wielded substantial authority over pricing, certification of new facilities, and accounting practices. A landmark early case was its licensing of major projects like the Bonneville Dam and the construction of dams by the Tennessee Valley Authority. In the natural gas sector, a pivotal moment was the 1954 Supreme Court decision in Phillips Petroleum Co. v. Wisconsin, which extended the commission's jurisdiction to regulate wellhead prices of gas sold into interstate commerce. This decision led to decades of contentious regulation and market distortions. The commission also dealt with significant cases involving the Hope Natural Gas Company and the Interstate Natural Gas Association of America, shaping the economic landscape of the mid-20th century energy market.

Reorganization and successor agency

By the 1970s, the commission faced widespread criticism for regulatory inefficiency and its handling of the energy crises. The Department of Energy Organization Act of 1977, signed by President Jimmy Carter, abolished the Federal Power Commission effective October 1, 1977. Its regulatory functions were transferred to a new agency, the Federal Energy Regulatory Commission (FERC), which was placed within the newly created United States Department of Energy. This reorganization aimed to consolidate federal energy policy and streamline regulation. FERC inherited the commission's mandates over electricity, natural gas, and hydropower, while also taking on new responsibilities related to oil pipeline rates.

Commissioners and leadership

The commission was led by five commissioners appointed by the President of the United States and confirmed by the United States Senate, with one designated as chairman. Its first chairman under the independent structure was George Otis Smith, former director of the United States Geological Survey. Notable chairs included Leland Olds, a prominent New Deal regulator whose renomination was controversially rejected by the Senate in 1949, and Joseph C. Swidler, who served during the John F. Kennedy and Lyndon B. Johnson administrations. Its final chairman was Charles B. Curtis, who oversaw the transition to FERC. Other significant commissioners included John A. Carver Jr. and Rush Moody Jr., who contributed to major policy decisions during the agency's history. Category:Defunct agencies of the United States government Category:Energy in the United States