History of FERC
History of FERC
Founding of FPC
In 1920, Congress established the Federal Power Commission (FPC) to coordinate hydroelectric projects under federal control. Under the joint administration of the Secretary of War, Interior, and Agriculture the FPC could only employ an Executive Secretary, while all other personnel was borrowed from these administrating executive departments.
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This organization resulted in conflicting mandates, making it difficult to produce a consistent energy policy. Thus, in 1928 Congress voted to give the FPC funds to permanently hire their borrowed staff. Two years later, the Federal Power Act established a five-member, bipartisan commission to run the FPC.
Expansion of the FPC’s mission
With the passage of new acts and court decisions the mission of the FPC continued to expand.
As a result of their expanded jurisdiction the FPC and the nation faced an energy crisis. There was a colossal backlog of applications for natural gas permits, while there were chronic brownouts in the 1960s and the OPEC embargo in the 1970s. This called for reorganization of the FPC.
Reorganization of the FPC
In 1977, Congress reorganized the FPC as FERC and the responsibilities of the Commission continued to expand.
In the late 1970s FERC provided for gradual deregulation.
Deregulation allows consumers to negotiate the best terms for supply and transportation of natural gas to markets. Due to deregulation of the US gas industry production has increased, proved reserves have decreased, and gas usage is increasing.
FERC Order No. 888
On April 24, 1996, FERC issued its Order No. 888, a final rule regarding electric industry restructuring.
Order No. 888:
In 1999, FERC issued Order No. 2000 , fostering participation in regional transmission organizations (RTOs) and Independent System Operators (ISOs), by establishing guidelines that a transmission entity must meet in order to qualify as an RTO. The expectation is that the RTOs will increase efficiency in wholesale energy markets and lower end-prices to consumers. Voluntary RTOs and ISOs have been formed in California (CAISO) , Southwest (SPP) , Midwest (MISO) , Mid-Atlantic (PJM) , New York (NYISO) , and New England (ISO-NE) .
The Energy Policy Act of 2005 was the first major energy law enacted in over a decade, and makes the most significant changes in Commission authority since the Federal Power Act and Natural Gas Act. By passing the Energy Policy Act of 2005, Congress signaled a strong vote of confidence in the Commission. The Energy Policy Act of 2005 gave the Commission significant new responsibilities and granted it significant new authority to discharge these responsibilities by modifying the Federal Power Act, the Natural Gas Act, and the Public Utility Regulatory Policies Act of 1978. In addition the Energy Policy Act of 2005 repealed the Public Utility Holding Company Act of 1935 and in its place created a new rule, which emphasizes access to books and records. The Commission's significant new responsibilities also include:
On February 15, 2007, the Commission adopted a final rule reforming its decade-old open-access transmission regulatory framework that will ensure transmission service is provided on a nondiscriminatory and just and reasonable basis, as well as provide for more effective regulation and transparency in the operation of the transmission grid. The rule is designed to: (1) strengthen the pro forma open-access transmission tariff, or OATT, to ensure that it achieves its original purpose of remedying undue discrimination; (2) provide greater specificity to reduce opportunities for undue discrimination and facilitate the Commission's enforcement; and (3) increase transparency in the rules applicable to planning and use of the transmission system.
On October 17, 2008, FERC issued Order No. 719 which finalized regulations that will strengthen the operation and improve the competitiveness of organized wholesale electric markets through the use of demand response and by encouraging long-term power contracts, strengthening the role of market monitors and enhancing regional transmission organization (RTO) and independent system operator (ISO) responsiveness.