Federal Energy Regulatory Commission

Definition

The Federal Energy Regulatory Commission (FERC) is an independent agency of the U.S. government responsible for regulating the transmission and wholesale sale of electricity and natural gas. FERC plays a crucial role in overseeing the energy market, ensuring fair rates, and fostering competition, especially during periods of energy crisis such as the one experienced in the late 1970s and early 1980s.

5 Must Know Facts For Your Next Test

1. FERC was created in 1977 through the Department of Energy Organization Act, primarily to address the growing challenges in energy regulation during the energy crisis.
2. One of FERC's major responsibilities includes approving interstate electricity transmission projects to enhance grid reliability and efficiency.
3. FERC has the authority to regulate hydroelectric projects, determining licensing and operational standards for such facilities.
4. During Carter's presidency, FERC was instrumental in implementing policies that aimed to reduce dependency on foreign oil and promote alternative energy sources.
5. FERC plays a vital role in ensuring that rates for electricity and natural gas are just and reasonable, which was particularly important during the economic upheaval of the late 1970s.

Review Questions

• How did FERC address challenges during the energy crisis of the late 1970s?
  • During the energy crisis of the late 1970s, FERC took on a crucial role in regulating energy markets to ensure stability and fairness. The commission worked to oversee electricity and natural gas transmission, which included approving necessary infrastructure projects to improve reliability. Additionally, FERC facilitated policies that encouraged alternative energy sources, aligning with President Carter's initiatives to reduce reliance on foreign oil.
• Evaluate FERC's effectiveness in regulating energy prices during Carter's administration.
  • FERC's effectiveness during Carter's administration can be evaluated through its efforts to stabilize energy prices amid rising costs and supply uncertainties. The commission implemented regulations that aimed to keep electricity and natural gas rates fair for consumers while also promoting competition within the market. However, challenges remained due to external factors such as international oil markets, suggesting that while FERC played a significant role, it could not fully control all elements affecting energy pricing.
• Assess the long-term impacts of FERC's policies on today's energy landscape in relation to sustainability.
  • The long-term impacts of FERC's policies can be assessed through their influence on today's energy landscape, especially regarding sustainability and renewable energy development. By establishing regulations that encourage competition and fairness in energy markets, FERC has paved the way for greater integration of renewable resources into the grid. This aligns with contemporary goals of reducing carbon emissions and fostering cleaner energy solutions, illustrating how FERC's early initiatives continue to shape current energy policies.

Related terms

Energy Crisis: A period of severe energy shortages and rising prices that often leads to significant economic and social impacts, notably the energy crisis of the 1970s.

Nuclear Regulatory Commission: An independent agency responsible for regulating commercial nuclear power plants and nuclear material to ensure public safety and environmental protection.

Public Utility Regulatory Policies Act:

A law passed in 1978 aimed at promoting energy conservation and encouraging the development of renewable energy sources by establishing a framework for regulating utilities.