Federal Energy Regulatory Commission

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The Federal Energy Regulatory Commission (FERC) is an independent agency of the United States government that regulates energy industries, supposedly in the interest of the American public.[1] It emphasizes economic and environmental concerns in its regulations. Critics complain that FERC, like all large agencies, are subject to agency capture such that they actually advance the interests of the industries they regulate.

Specifically, FERC regulates the interstate transmission of natural gas, oil, and electricity, including hydropower and natural gas projects. Its regulations fall under several categories explained below.

Membership and Support

FERC consists of five commissioners appointed by the President and confirmed by the Senate. Commissioners serve five-year terms, each holding an equal vote. One Commissioner is designated by the President to serve as the Chairman, and he is FERC's administrative head.

No more than three commissioners may belong to the same political party. For example, there can be 3 Democrats and 2 Republicans, or 3 Republicans and 2 Democrats, but not 4 Democrats and only 1 Republican.

Neither the President nor Congress can review a decision by FERC. This helps preserve its independence, hopefully leading to fair and unbiased decisions. Appeals of FERC decisions are to a federal appeals court, typically in D.C.

Fees and annual charges paid by the regulated industries are what fund FERC's costs of operation.

Economic Regulation

The economic regulation by FERC includes dictating terms for the:

  • Transmission and sale of natural gas for resale in interstate commerce
  • Transmission of oil by pipeline in interstate commerce
  • Transmission and wholesale sales of electricity in interstate commerce

FERC also administers accounting and financial reporting regulations

Infrastructure Regulation

FERC's authority over infrastructures includes:

  • licenses and inspects private, municipal, and state hydropower projects
  • the siting of and abandonment of interstate natural gas facilities, including pipelines, storage and liquefied natural gas
  • environmental matters related to natural gas and hydropower projects and major electricity policy initiatives

Areas Outside of FERC's Jurisdiction

FERC has no authority to regulate:

  • the retail electricity and natural gas sales to consumers
  • oil company mergers and acquisitions
  • municipal power systems
  • federal power marketing agencies like the Tennessee Valley Authority
  • most rural electric cooperatives
  • approval to construct electric generation, transmission, or distribution facilities, except hydropower
  • nuclear power plants
  • oil pipeline construction
  • abandonment of service related to oil facilities
  • pipeline safety or pipeline transportation on or across the Outer Continental Shelf
  • local distribution pipelines of natural gas
  • development and operation of natural gas vehicles


  1. http://www.ferc.gov/