The Federal Energy Regulatory Commission (FERC) is an independent federal agency. Its mission is to provide “reliable, efficient and sustainable energy for customers.” FERC regulates transmission of natural gas, oil, and electricity within states. It also regulates interstate sale of electricity, electric rates, natural gas rates, grant of hydroelectric licenses, and other energy related matters.
The FERC was initially founded as the Federal Power Commission (FPC) in 1920 and was transformed into an independent agency in 1935. The FPC only dealt with federal hydropower development and interstate electricity. In 1938, the Natural Gas Act expanded its jurisdiction to interstate natural gas pipelines and wholesale sales. In 1942, the FPC was given the additional responsibility of dealing with licensing of natural gas facilities. In 1954, the Supreme Court granted FPC extended jurisdiction over sales of natural gas in interstate commerce[i].
The FERC has five members appointed by the President upon confirmation by the Senate. The FERC enjoys so much independence that its decisions are not reviewed by the President or Congress. However, its decisions can be challenged before federal courts. Although independent of the Department of Energy (DOE), the DOE can interfere with FERC proceedings. The FERC is financially self sufficient because it recovers its costs through annual charges/fees from the industries it regulates.
The FERC currently regulates around 16,00 hydroelectric power projects in the U.S. It also assists the U.S. Coast Guard in understanding the safety, security and environmental impact of proposed projects.
[i] Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672 (U.S. 1954)