Federal Energy Regulatory Commission – Definition

Cite this article as:"Federal Energy Regulatory Commission – Definition," in The Business Professor, updated January 11, 2020, last accessed October 22, 2020, https://thebusinessprofessor.com/lesson/federal-energy-regulatory-commission-definition/.


Federal Energy Regulatory Commission (FERC) Definition

The Federal Energy Regulatory Commission (FERC) is an administrative agency of the US Government. It regulates the rates and transmission of energy (electricity, natural gas, and oil) nationally, including the development of facilities and infrastructure.

FERC is an independent agency and is not under the direct control of the Executive Branch.

A Little More on What is the Federal Energy Regulatory Commission

The FERC was established by the Department of Energy Organization Act of 1977 to regulate the energy market across the country.

Pursuant to the Energy Policy Act of 2005 FERC regulates:

  • Transmission and wholesale of electricity across state lines (including maintenance of the high-voltage interstate transmission system, applications for new projects, and infrastructure development);
  • Merger and combination activity by energy suppliers;
  • Transmission and sale of natural gas (including pipelines, facilities, and LNG terminals);
  • Transmission of oil by pipeline;
  • Licensing of hydroelectric facilities; and
  • Regulation of energy markets, including administering accounting and financial regulations affecting regulated companies.

It performs regulatory functions under the Federal Power Act as follows:

  • Part I – Hydroelectric Dam Licensing and Safety
  • Part II – Electrical Transmission
  • Part III – Wholesale Rates

It performs regulates the transmission, service, and rates for natural gas pursuant to the Natural Gas Act. It relies on the Interstate Commerce Act to regulate the transmission, service, and rates for oil.

FERC relies upon the following principles:

  • Effective use of resources to further strategic priorities.
  • Adhere to standards of due process and transparency,
  • Provide regulatory certainty and consistency,
  • Opportunity for participation by regulated or interested parties,
  • Achieve the appropriate and expeditious resolution of proceedings.

References for “Federal Energy Regulatory Commission – FERC



https://www.investopedia.com › Investing › Commodities





Was this article helpful?