Federal Energy Regulatory Commission

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Federal Energy Regulatory Commission
Agency overview
Formed October 1, 1977 (1977-10-01)
Jurisdiction U.S. government
Headquarters Washington, D.C., U.S.
Agency executive
Parent agency U.S. Department of Energy
Website www.FERC.gov

The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. FERC also reviews and authorizes liquefied natural gas (LNG) terminals, interstate natural gas pipelines, and non-federal hydropower projects.

The top priorities in 2014 include:

  • smart grid
  • demand response
  • integration of renewables
  • natural gas - electric coordination
  • Order No. 1000 - transmission planning and cost allocation[1]


Federal Power Commission

The Federal Power Commission (FPC), which preceded FERC, was established by Congress in 1920 to allow cabinet members to coordinate federal hydropower development.

In 1935, the FPC was transformed into an independent regulatory agency with five members nominated by the President and confirmed by the Senate. The FPC was authorized to regulate both hydropower and interstate electricity.

Natural Gas Act of 1938

In 1938, the Natural Gas Act gave FPC jurisdiction over interstate natural gas pipelines and wholesale sales. In 1942, this jurisdiction was expanded to cover the licensing of more natural gas facilities. In 1954, the Supreme Court decision in Phillips Petroleum Co. v. Wisconsin extended FPC jurisdicition over all wellhead sales of natural gas in interstate commerce.

Birth of DOE, FPC Becomes FERC

In response to the 1973 oil crisis, Congress passed the Department of Energy Organization Act in 1977, which consolidated various energy-related agencies into a Department of Energy. Congress insisted that a separate independent regulatory body be retained, and the FPC was renamed the Federal Energy Regulatory Commission (FERC), preserving its independent status within the Department.[2] FERC was also given added responsibility to hear appeals of DOE oil price control determinations and to conduct all "on the record" hearings for DOE.[3] As a result, DOE does not have any administrative law judges. As a further protection, when the Department of Energy proposes a rule, it must refer the proposal to FERC, and FERC can take over the proceeding if FERC determines that the rulemaking "may significantly affect" matters in its jurisdiction.[4] The DOE Act also transferred the regulation of interstate oil pipelines from the Interstate Commerce Commission to FERC.[5] However, the FERC lost some jurisdiction over the imports and exports of gas and electricity.

In 1978, FERC was given additional responsibilities for harmonizing the regulation of wellhead gas sales in both the intrastate and interstate markets. FERC also administered a program to foster new cogeneration and small power production under the Public Utilities Regulatory Policy Act of 1978, which was passed as part of the National Energy Act of 1978. The National Energy Act included the Natural Gas Policy Act, which reduced the scope of federal price regulation, to bring greater competition to both the natural gas and electric industry.

In 1989, Congress ended federal regulation of wellhead natural gas prices, with the passage of the Natural Gas Wellhead Decontrol Act of 1989.[6]

Energy Policy Act of 2005

The Energy Policy Act of 2005 expanded FERC's authority to impose mandatory reliability standards on the bulk transmission system and to impose penalties on entities that manipulate the electricity and natural gas markets. The Energy Policy Act of 2005 gave FERC additional responsibilities as outlined in FERC's top priorities and updated strategic plan.

FERC's Primary Duties

The responsibilities of FERC now include the following:

  • regulating the transmission and sale of natural gas for resale in interstate commerce
  • regulating the transmission of oil by pipelines in interstate commerce
  • regulating the transmission and wholesale sales of electricity in interstate commerce
  • licensing and inspecting private, municipal, and state hydroelectric projects
  • approving the siting of and abandonment of interstate natural gas facilities, including pipelines, storage and liquefied natural gas
  • ensuring the reliability of high voltage interstate transmission system
  • monitoring and investigating energy markets
  • using civil penalties and other means against energy organizations and individuals who violate FERC rules in the energy markets
  • overseeing environmental matters related to natural gas and hydroelectricity projects and major electricity policy initiatives
  • administering accounting and financial reporting regulations and regulating businesses of regulated companies

Jurisdiction and authorities

FERC is an independent regulatory agency within the United States Department of Energy. President and Congress do not generally review FERC decisions, but the decisions are reviewable by the federal courts. FERC is self-funding, in that it pays for its own operations by imposing annual charges and fees on the industries it regulates.[7]

FERC is independent of the Department of Energy because FERC activities "shall not be subject to further view by the Secretary [of Energy] or any officer or employee of the Department".[8] The Department of Energy can, however, participate in FERC proceedings as a third party.

The FERC has recently been promoting the voluntary formation of regional transmission organizations (RTOs) and Independent System Operators (ISOs) to eliminate the potential for undue discrimination in access to the electric grid. Since the passage of new energy legislation, it has aggressively developed regulations to implement key provisions of the new law dealing with LNG terminals, electric reliability, Public Utility Holding Company Act of 1935 repeal and implementation of the Public Utility Holding Company Act of 2005, new merger regulations and new anti-market manipulation regulations.

FERC investigated the alleged manipulation of electricity market by Enron and other energy companies, and their role in the California electricity crisis. FERC has collected more than $6.3 billion from California electric market participants through settlements. FERC is also working with Canadian energy officials to facilitate processing of a proposed Alaskan natural gas pipeline, which would bring natural gas from Alaska's North Slope to the lower 48 states.

FERC regulates approximately 1,600 hydroelectric projects in the U.S. It is largely responsible for permitting construction of a large network of interstate natural gas pipelines. FERC also works closely with the United States Coast Guard to review the safety, security, and environmental impacts of proposed LNG terminals and associated shipping.


The Commissioners are:


FERC has been under increasing criticism as being a "Rubber Stamp" for industry,[9] and a "Rogue Agency" which permits projects "illegally".[10] The FERC have been found guilty in the Federal Courts violating the National Environmental Policy Act by allowing project segmentation as a way of avoiding cumulative impacts analysis,[11] and accused of using illegal stalling tactics to keep lawsuits out of the courts while projects get built.[12] There have been numerous disruptions of the regular open meetings of the Commission by people from impacted communities,[13] and two week-long blockades of their headquarters in Washington DC.[14] "Pipelines are facing unprecedented opposition," Commissioner LaFleur remarked to the National Press Club recently. "We have a situation here."[15]

See also

Related legislation


  1. "Top Initiatives". www.ferc.gov. Retrieved 9 Apr 2014.<templatestyles src="Module:Citation/CS1/styles.css"></templatestyles>
  2. 42 U.S.C. § 7134
  3. 42 U.S.C. § 7172(d).
  4. 42 U.S.C. § 7174.
  5. 42 U.S.C. §7172(b) (since repealed)
  6. http://www.gpo.gov/fdsys/pkg/STATUTE-103/pdf/STATUTE-103-Pg157.pdf
  7. "About FERC". Retrieved 9 Apr 2014.<templatestyles src="Module:Citation/CS1/styles.css"></templatestyles>
  8. 42 U.S.C. § 7172(g)
  9. FERC faces heightened scrutiny as gas projects proliferate, Hannah Northey, E&E, November 3, 2014 [1]
  10. Robert F. Kennedy Jr., The Ed Show, 2/24/15
  11. See, Delaware Riverkeeper Network v. FERC, 13-1015, U.S. Court of Appeals for the D.C. Circuit [2]
  12. See, Writ of Mandamus, Stop the Pipeline v. FERC
  13. e.g., see, RTO Insider, Protesters Interrupt FERC Open Meeting, Michael Brooks, 1/26/2015 [3]
  14. Meet the People Making Life a Little More Difficult for FERC this Week, RTO Insider-May 26, 2015 [4]
  15. FERC Commissioner Cheryl LaFleur, National Press Club. Video Transcript

Further reading

External links