What Is the Federal Energy Regulatory Commission?

The Federal Energy Regulatory Commission (FERC) is an independent agency that regulates the interstate transmission of electricity, natural gas, and oil. FERC also reviews proposals to build liquefied natural gas (LNG) terminals and interstate natural gas pipelines as well as licensing hydropower projects.

Understanding the Federal Energy Regulatory Commission

The Federal Energy Regulatory Commission’s stated mission is to assist consumers in obtaining reliable, efficient, and sustainable energy services at a reasonable cost through appropriate regulatory and market means. It has five guiding principles. FERC aims to use its resources efficiently and effectively to achieve its strategic priorities via organizational excellence. With the goal of due process and transparency, it aims to be open and fair to all participants. In its orders, opinions, and reports, FERC strives to provide regulatory certainty through consistent approaches and actions. FERC conducts regular outreach to ensure that interested parties have an opportunity to contribute to the performance of its responsibilities.

FERC Background and Responsibilities

FERC was established under the Department of Energy Organization Act of 1977. It regulates electric transmission and wholesale sales rates and services principally under Parts II and III of the Federal Power Act. It regulates Hydroelectric dam licensing and safety under Part I of the Federal Power Act. FERC oversees natural gas pipeline transportation rates and services principally under the Natural Gas Act. It regulates oil pipeline transportation rates and services under the Interstate Commerce Act. FERC is subject to these statutes and can only operate within what the statutes allow.

The Energy Policy Act of 2005 gave FERC many additional responsibilities. It regulates the transmission and wholesale sales of electricity in interstate commerce. It reviews certain mergers and acquisitions and corporate transactions by electricity companies. FERC regulates the transmission and sale of natural gas for resale in interstate commerce. Also, it regulates the transportation of oil by pipeline in interstate commerce. FERC approves the siting and abandonment of interstate natural gas pipelines and storage facilities. It reviews the siting application for electric transmission projects. FERC ensures the safe operation and reliability of proposed and operating LNG terminals. In addition, it licenses and inspects private, municipal, and state hydroelectric projects. FERC protects the reliability of the high voltage interstate transmission system through mandatory reliability standards. It monitors and investigates energy markets. It enforces FERC regulatory requirements through the imposition of civil penalties and other means. And, it oversees environmental matters related to natural gas and hydroelectricity projects as well as administers accounting and financial regulations and conduct of regulated companies.