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Federal Energy Regulatory Commission

What is Federal Energy Regulatory Commission

The Federal Energy Regulatory Commission (FERC) is the United States federal agency that regulates the transmission and wholesale sale of electricity and natural gas in interstate commerce, and regulates the transportation of oil by pipeline in interstate commerce.

Federal Energy Regulatory Commission
Federal Energy Regulatory Commission

Overview

The Federal Energy Regulatory Commission (FERC), formerly known as the Federal Power Commission is the federal agency responsible for regulating the transmission of electricity, natural gas, and oil. The FERC is composed of up to five commissioners who are appointed by the President with the consent of the Senate. No more than three commissioners may belong to the same political party. As an independent agency, neither the President nor Congress review the FERC’s decisions.

Breaking Down FERC

The FERC ensures that energy business matters are conducted in proper ethical fasion. For example, it investigates potential fraud and manipulation in the markets, and make sure that consumers have proper access to natural gas
when needed.

Energy Sector

The energy sector is a category of stocks that relate to producing or supplying energy. This sector includes companies involved in the exploration and development of oil or gas reserves, oil and gas drilling, or integrated power firms.

Criticism

FERC has been under increasing criticism as being a Rubber Stamp for industry, and a Rogue Agency which permits projects illegally. In a July 1, 2014 decision, No Gas Pipeline v. Federal Energy Regulatory Commission, the United States Court of Appeals for the District of Columbia addressed similar claims by noting that pipeline applicants are not likely to pursue many certificates that are hopeless.

The Energy Policy Act of 2005 gives the Commission additional responsibilities. They are:

  1. Regulate the transmission and wholesale sales of electricity in interstate commerce;

  2. Review certain mergers and acquisitions and corporate transactions by electricity companies;

  3. Regulate the transmission and sale of natural gas for resale in interstate commerce;

  4. Regulate the transportation of oil by pipeline in interstate commerce;

  5. Approve the siting and abandonment of interstate natural gas pipelines and storage facilities;

  6. Review the siting application for electric transmission projects under limited circumstances;

  7. Ensure the safe operation and reliability of proposed and operating LNG terminals;

  8. License and inspects private, municipal, and state hydroelectric projects;

  9. Protect the reliability of the high voltage interstate transmission system through mandatory reliability standards;

  10. Monitor and investigates energy markets;

  11. Enforce FERC regulatory requirements through imposition of civil penalties and other means;

  12. Oversee environmental matters related to natural gas and hydroelectricity projects and other matters;

  13. Administer accounting and financial reporting regulations and conduct of regulated companies.

Some of the areas outside the jurisdiction of the Commission are:

  1. Issuance of State Water Quality Certificates;

  2. Oversight for the construction of oil pipelines;

  3. Abandonment of service as related to oil facilities;

  4. Mergers and acquisitions as related to natural gas and oil companies;

  5. Regulation of local distribution pipelines of natural gas;

  6. Reliability problems related to failures of local distribution facilities.

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