Federal Energy Regulatory Commission’s Competitive Energy Landscape
What Is FERC?
The Federal Energy Regulatory Commission (FERC) is an independent agency of the federal government that regulates the interstate transmission of electricity, natural gas, and oil. FERC has jurisdiction over wholesale sales of energy in interstate commerce. FERC also issues licenses and regulates hydroelectric power projects. FERC reviews and approves mergers and acquisitions and corporate transactions of regulated utilities. FERC helps ensure energy markets operate fairly, reliably, and efficiently while protecting consumers and supporting competition.
History
FERC was established in 1977 through the Department of Energy Organization Act. The agency assumed many of the responsibilities previously held by the Federal Power Commission, which had regulated interstate electricity and natural gas activities since 1920.
Over the years, FERC has played a key role in developing competitive wholesale electricity markets and expanding access to the nation’s energy infrastructure.
What Does FERC Do?
FERC regulates the interstate transmission of electricity and natural gas, reviews and approves natural gas infrastructure and approves certain transmission infrastructure projects, and oversees wholesale energy markets. The agency works to ensure that rates for transmission (natural gas, electric and oil) and wholesale energy sales are just and reasonable.
FERC also helps maintain the reliability of the electric grid by overseeing standards developed by the electric reliability organization and monitoring market activity to prevent manipulation and abuse.
FERC’s Role in Retail Energy
Although FERC does not regulate retail energy suppliers or set retail electricity and natural gas rates, it plays an important role in supporting competitive energy markets.
FERC oversees the wholesale markets where electricity is bought and sold before it reaches homes and businesses. These wholesale markets provide the foundation for retail competition in many restructured states. By promoting open access to transmission systems and ensuring fair competition among market participants, FERC helps create conditions that allow retail energy choice programs to operate.
State public utility commissions regulate retail energy suppliers and consumer-facing programs, while FERC oversees the interstate transmission system and wholesale energy markets that support the delivery of energy across the country.
