Federal Energy Regulatory Commission - History

History

A predecessor agency, the Federal Power Commission, was founded in 1930 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. At that time the FPC regulated both hydropower and interstate electricity.

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.

In response to an energy crisis, Congress passed the DOE 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, preserving its independent status "within" the Department. 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. As a result, DOE does not have any administrative law judges. As a further protection, when DOE proposes a rulemaking, 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. The DOE Act also transferred the regulation of interstate oil pipelines from the Interstate Commerce Commission to FERC. 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.

In 1983, Congress ended federal regulation of wellhead natural gas prices. At this time, FERC undertook to bring greater competition to both the natural gas and electric industries.

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. As part of that responsibility, FERC:

• Regulates the transmission and sale of natural gas for resale in interstate commerce;
• Regulates the transmission of oil by pipelines in interstate commerce;
• Regulates the transmission and wholesale sales of electricity in interstate commerce;
• Licenses and inspects private, municipal, and state hydroelectric projects;
• Approves the siting of and abandonment of interstate natural gas facilities, including pipelines, storage and liquefied natural gas;
• Ensures the reliability of high voltage interstate transmission system;
• Monitors and investigates energy markets;
• Uses civil penalties and other means against energy organizations and individuals who violate FERC rules in the energy markets;
• Oversees environmental matters related to natural gas and hydroelectricity projects and major electricity policy initiatives; and
• Administers accounting and financial reporting regulations and conduct of regulated companies.