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Oversight and Investigation

What is FERC's responsibilities in monitoring the energy markets?

The Commission oversees energy markets to ensure that all companies and market participants follow its rules and regulations. FERC:

  • Promotes the understanding of energy market operations;
  • Ensures that the market supports competition; and
  • Maintains a just and reasonable marketplace by enforcing the rules.

What is an energy market?

An energy market is the exchange of electricity and natural gas between buyers and sellers. The energy markets that the Commission oversees are wholesale markets- sales are between different energy companies or between companies and marketers. Generators sell large amounts of electricity (bulk power), while buyers are typically are electric utilities who resell power to residential and business consumers.


Energy markets have other participants known as marketers. Marketers act as middlemen by purchasing electricity and natural gas from those who have it and selling it to those who need it. FERC oversees these complex transactions to make sure that all market participants play by the rules.

The Evolution of energy market regulation

The natural gas and electric utilities were natural monopolies External Link. As a result, natural gas and electric utilities received exclusive franchises over assigned areas. Parts of their activities were regulated by the federal government and other parts, particularly retail prices, were regulated at the state level.

In the late 1970s, industries started to rely on the pressure of market competition for regulation rather than government action. Thus, many companies could compete to produce and sell natural gas and electric power. This left only transmission and distribution lines to regulation.

The Commission began to further lighten regulation of the energy industry in the 1990s through a series of orders:

  • Order No. 636: created open access for shipping on natural gas pipelines;
  • Order No. 888: created open access to electric transmission lines; and
  • Order No. 2000: established rules for and encouraged the development of Regional Transmission Operators (RTOs).

Energy markets are dynamic, unpredictable, and sometimes counterproductive. As a result, using market oversight for early detection and correction of market problems is a new and vital part of the Commission's overall regulatory strategy.

What is the Office of Enforcement's role in oversight and investigations?

The Office of Enforcement serves the public interest by guiding the evolution and operation of energy markets to ensure effective regulation and protecting customers through understanding markets and their regulation, timely identifying and remedying market problems, assuring compliance with Commission rules and regulations, and detecting and crafting penalties to address market manipulation.