Legal Definitions - FERC

FERC stands for the Federal Energy Regulatory Commission. It is an independent agency of the United States government responsible for regulating the interstate transmission and wholesale sale of electricity and natural gas, as well as the transportation of oil by pipeline. FERC also licenses and inspects private, municipal, and state hydroelectric projects and oversees the siting of liquefied natural gas (LNG) terminals. Its primary goal is to ensure fair rates, reliable service, and competitive markets in these energy sectors across state lines.

Here are some examples of how FERC's authority applies:

• Imagine a large utility company proposing to build a new high-voltage power line that will carry electricity generated by a wind farm in one state to a major metropolitan area in a neighboring state. Because this transmission line crosses state borders, it falls under FERC's jurisdiction. The utility would need to obtain approval from FERC for the construction and operation of the line, and FERC would also regulate the rates charged for transmitting that electricity to ensure they are just and reasonable for consumers.

• Consider an energy company that wants to construct a new natural gas pipeline system to transport gas from a production field in Texas to distribution hubs serving homes and businesses in several states across the Midwest. Since this pipeline is designed for interstate commerce, the company must apply to FERC for a certificate of public convenience and necessity. FERC would review the project's environmental impact, economic need, and safety standards before granting approval, ensuring the pipeline serves the public interest.

• A privately owned hydroelectric dam on a river in Oregon generates power that is fed into the regional electricity grid. The dam's operating license, originally issued decades ago, is approaching its expiration date. The dam owner must apply to FERC for a new license to continue operating the facility. FERC will conduct a comprehensive review, considering factors such as environmental impacts on fish and wildlife, recreational access, public safety, and the project's continued ability to produce clean energy efficiently, before deciding whether to issue a new license.