Federal Energy Regulatory Commission
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| Federal Energy Regulatory Commission | |
|---|---|
 U.S. Government · Public domain · source | |
| Name | Federal Energy Regulatory Commission |
| Formed | 1977 |
| Preceding1 | Federal Power Commission |
| Jurisdiction | United States |
| Headquarters | Washington, D.C. |
Federal Energy Regulatory Commission is an independent regulatory agency created to oversee interstate transmission of electricity, natural gas, and hydropower in the United States. It succeeded the Federal Power Commission and operates within the framework of federal statutes such as the Federal Power Act, the Natural Gas Act, and the Public Utility Regulatory Policies Act of 1978. The Commission issues orders, approves tariffs, and adjudicates disputes among market participants including Regional Transmission Organizations, Independent System Operators, and investor-owned utilities like Duke Energy and NextEra Energy.
History
The agency traces institutional roots to the Federal Power Commission established after the New Deal era, evolving through landmark legislation including the Public Utility Regulatory Policies Act of 1978 and the Energy Policy Act of 1992. In 1977, the Federal Energy Regulatory Commission was formed amid energy crises involving events such as the 1973 oil crisis and the 1979 energy crisis. Subsequent decades saw FERC-shaped developments like the creation of Independent System Operators and Regional Transmission Organizations following debates exemplified by the California electricity crisis and rulings after the Enron scandal. Major statutory interactions have involved the Natural Gas Policy Act of 1978 and disputes brought before the United States Court of Appeals for the District of Columbia Circuit and the Supreme Court of the United States.
Organization and Structure
The Commission is structured around a panel of commissioners appointed by the President of the United States and confirmed by the United States Senate, serving staggered terms. Administrative offices coordinate rulemaking, enforcement, and market oversight, interfacing with entities such as North American Electric Reliability Corporation and regional bodies like the California Independent System Operator and PJM Interconnection. The Office of the General Counsel handles litigation in the United States Court of Appeals for the District of Columbia Circuit, while the Office of Energy Projects manages licensing for licenses involving hydropower and navigable waters under the Federal Power Act. Interagency coordination includes interactions with the Department of Energy and Environmental Protection Agency on matters where statutes like the Clean Water Act intersect.
Functions and Responsibilities
FERC's functions encompass licensing, tariff approval, market oversight, and rulemaking under statutes such as the Federal Power Act and the Natural Gas Act. It issues licenses for hydropower projects and authorizations for liquefied natural gas terminals, and approves transmission tariffs affecting participants like Southern Company and Exelon. The Commission enforces reliability standards developed by the North American Electric Reliability Corporation and approves regional planning by organizations such as ISO New England and Midcontinent Independent System Operator. FERC also administers competitive wholesale electricity markets, capacity market rules, and interconnection policies, adjudicating disputes between market participants including utilities and pipeline operators.
Regulation and Enforcement
Regulatory authority includes approval of wholesale rates, oversight of market manipulation, and enforcement actions under statutes and Commission rules. FERC conducts investigations, issues civil penalties, and approves settlement agreements involving entities like American Electric Power and TransCanada Corporation. Enforcement cases have involved allegations similar to those in the Enron scandal and have prompted administrative hearings before FERC and appeals to the United States Court of Appeals for the Ninth Circuit or the D.C. Circuit. The Commission coordinates with the Federal Bureau of Investigation and the Commodity Futures Trading Commission when criminal matters or market derivatives are implicated.
Major Policies and Decisions
Significant FERC decisions have shaped wholesale market structure, transmission planning, and interconnection procedures. Important orders include directives comparable in impact to Order No. 888 style reforms that addressed open access transmission and pro-competitive reforms earlier in the 1990s, as well as subsequent rulemakings affecting demand response, energy storage, and renewable energy integration. Commission rulings have influenced high-profile projects such as interstate natural gas pipelines and regional transmission expansion initiatives associated with entities like PJM Interconnection and ISO New England, and have been integral to litigation involving the Supreme Court of the United States and the United States Court of Appeals for the District of Columbia Circuit.
Criticisms and Controversies
FERC has faced criticisms involving perceived regulatory capture, procedural fairness, and balancing reliability with environmental objectives in cases implicating the Environmental Protection Agency and National Marine Fisheries Service. Controversies include disputes over pipeline approvals challenged in the United States Court of Appeals for the Fourth Circuit and allegations of inadequate review under laws like the National Environmental Policy Act. Stakeholders such as environmental groups, consumer advocates, and industry trade associations including the American Petroleum Institute and the Electric Power Supply Association have litigated or lobbied around FERC policies, while Congress and successive Presidents of the United States have debated its statutory authorities and budgetary matters.