Federal Energy Regulatory Commission | Key Regulatory Challenges
Shareholder-owned electric power companies are highly regulated at the federal and state levels. EEI works to ensure favorable regulatory outcomes at the Federal Energy Regulatory Commission, the Department of Energy, and other federal agencies.
Federal Energy Regulatory Commission (FERC)
FERC is the federal agency that regulates electricity transmission and wholesale electricity sales in interstate commerce. FERC has authority to regulate the prices, terms, and conditions of wholesale power sales and transmission services. FERC also implements the laws of Congress through orders and rulemakings on electricity policy.
Ensuring the Reliability of the Interstate Transmission System
FERC has oversight authority for the Electric Reliability Organization (ERO), an independent, self-regulating entity that enforces mandatory electric reliability rules on all users, owners, and operators of the nation’s transmission system. These reliability rules require otherwise unregulated utilities, such as electric cooperatives and government-owned utilities, to comply with mandatory standards.
In July 2006, FERC certified the North American Electric Reliability Corporation (NERC) as the ERO. In March 2007, FERC approved 83 NERC Reliability Standards, which became the first set of legally enforceable standards for the U.S. bulk power system, effective June 4, 2007.
FERC also has limited backstop authority to site electric transmission facilities located in “national interest electric transmission corridors” if states cannot or will not act. The Department of Energy must identify such corridors, which may include any geographic area experiencing electric transmission capacity constraints or congestion.
Preventing Market Manipulation
One of FERC’s key priorities is to help assure that energy markets operate fairly. FERC has authority to investigate and prosecute allegations of manipulation in the energy markets. FERC also responds to complaints and reports of market activities or transactions that may be considered market manipulation, an abuse of an affiliate relationship, a tariff violation, or other possible violations or concerns. FERC’s anti-manipulation rule allows the agency to asses civil penalties (fines) on companies or individuals found in violation of the rule.
EEI actively participates in numerous FERC proceedings and files comments on behalf of our shareholder-owned electric company members.
Key Regulatory Challenges
The electric power industry anticipates several regulatory challenges in 2009, including:
- The impacts of the capital/credit crisis
- Demand response and energy efficiency
- The development and reliable integration of generation capacity and transmission infrastructure
- Transmission siting and permitting
- Wholesale power competition
- FERC enforcement/compliance
- Cyber security standards