FPA and Its Relatives
Congress passed this statute, which was created to address the lack of oversight over holding companies.
What is the Public Utility Holding Company Act of 1935?
Congress enacted PUHCA as a response to the shady business practices of huge utility holding companies during the 1920s and 30s. These holding companies controlled utilities in complicated pyramid structures, where a few investors at the top held controlling shares of many subsidiary companies. In the early 1930s, three holding companies controlled almost half the utility industry, with one owning 130 utilities.
This pyramid structure led to a variety of problems. For example, subsidiaries of the holding company could charge each other inflated rates for service, and hide the charges in their regulated rates. Also, since the holding company was legally separate from the subsidiary, it was not liable for debts. Some analysts believe that utility holding company abuses greatly contributed to the Stock Market Crash of 1929 and the ensuing Depression. Due to their shaky finances, holding companies were "fair weather" corporations, and when the Depression came, many went under.
The first iteration of the FPA did not address grid reliability. Section 1211 of the Energy Policy Act of 2004 added Section 215 to the FPA, which tasks FERC with certifying an Electric Reliability Organization. FERC subsequently issued Order No. 672, which designated this organization as the ERO, and adopted reliability standards to be enforced by that organization, subject to FERC oversight.
What is the North American Electric Reliability Corporation?
42 USC 7171(a) states that "There is established within the Department an ______ regulatory commission to be known as the Federal Energy Regulatory Commission."
What is independent?
FERC is an independent agency by statute. It aims to be independent from undue political party influence by having no more than 3 Commissioners from one political party. Generally, FERC decisions are reviewed by appellate courts, unlike other agencies that have direct presidential/congressional oversight. Generally, FERC is also independent from private parties, who are prohibited from having ex parte conversations with the Commissioners and FERC staff during certain contested case-specific proceedings.
This limits FERC's jurisdiction over intrastate electricity sales, as established by the FPA.
What is the Federalism?
FERC has exclusive jurisdiction over the "transmission of electric energy in interstate commerce,” and over the "sale of electric energy at wholesale in interstate commerce,” and over "all facilities for such transmission or sale of electric energy.“ FPA 201(b) (16 USC 824(b)). Federal authority “trumps” contrary state authority
This is the predecessor to FERC.
What is the Federal Power Commission (FPC)?
In 1930, the FPC was officially recognized as an independent federal agency comprised of five commissioners. At this time, the FPC was granted oversight of the interstate transmission of electricity and hydropower. Just eight years later, Congress passed the Natural Gas Act of 1938 (NGA), giving the FPC jurisdiction over the siting, operation and rates of interstate natural gas pipelines, and sales for resale of natural gas.
FERC inherited many (but not all – see 42 USC 7172) of the responsibilities of the FPC (which dates back to 1920); much of what it didn’t inherit went to DOE, but was subsequently delegated from DOE to FERC (Dept. of Energy Delegation Order No. 00-004-00A (May 16, 2006))
Congress enacted this statute to provide federal oversight of hydropower development on navigable waters in the United States.
What the Federal Water Power Act of 1920 (FWPA)?
This historic energy company, established in 1907, once held a near-monopoly over the transmission of electricity in the United States.
What is General Electric (GE)?
This was the year Congress established FERC.
What is 1977?
This is a set of terms and conditions contained in a transmission owner's or regional transmission organization's FERC-filed tariff that arguably grants incumbent transmission owners the right to construct regionally approved transmission projects located within their service territory.
What is a Federal Right of First Refusal?
In Order No. 1000, FERC found that the right of first refusal reforms are needed to protect against undue discrimination. In part, Order No. 1000 concluded that any federal rights of first refusal must be removed from FERC-approved tariffs. FERC was concerned that a federal right of first refusal may result in the loss of transmission infrastructure investment, discourage independent transmission company participation in regional processes, and increase costs. Any rights of first refusal, therefore, must be removed to eliminate the potential for undue discrimination against independent transmission companies and to ensure an open and inclusive regional planning process.
FERC's predecessor was placed under the direction of these three cabinet secretaries.
What is War, Interior, and Agriculture?
Congress originally placed the Commission under the direction of three cabinet secretaries: War, Interior, and Agriculture, all of whom had conflicting, overlapping, and sometimes parallel authority over various phases of hydropower.
This section of the FPA bans energy market manipulation.
What is FPA Section 222?
FPA Section 222 prohibits any entity subject to FERC’s FPA jurisdiction from using “any manipulative or deceptive device or contrivance …in contravention of such rules and regulations as the commission may prescribe as necessary or appropriate in the public interest or for the protection of electric ratepayers.” This expansion of federal jurisdiction was enacted just as FERC was completing an investigation, finding that market manipulation had played a role in triggering the California blackout crisis of 2000. FERC adopted its market manipulation regulations in Order No. 670.
This company was issued the first license under the FPA in March 1921.
What is the Niagara Falls Power Company?
This Act consolidated various federal agencies responsible for energy-related functions into a single department to address the national energy policy more effectively.
The Act was signed into law by President Jimmy Carter on August 4, 1977, in response to the energy crisis of the 1970s. The DOE was tasked with coordinating and managing the national energy policy, energy conservation, the nuclear weapons program, energy research, and development of domestic energy production.
What is the Department of Energy Organization Act?
Under § 42.1 of the Commission's regulations, there is a requirement that transmission organizations with organized electricity markets offer this thing long-term.
What are Firm Transmission Rights?
This term refers to a regulatory gap highlighted by a Supreme Court case that prevented states from regulating interstate electricity transactions.
What is the Attleboro Gap?
The "Attleboro Gap" refers to a regulatory void in the Federal Power Act that was highlighted by the 1927 Supreme Court case Public Utilities Commission of Rhode Island v. Attleboro Steam & Electric Company.
In this case, the Supreme Court ruled that the state of Rhode Island could not regulate the rates of an electricity sale from a Rhode Island company to a Massachusetts company because it was an interstate transaction. This decision created a regulatory gap, as there was no federal agency at the time with the authority to regulate such interstate electricity sales.
This gap, known as the "Attleboro Gap," led to the creation of the Commission to regulate interstate electricity sales and ensure fair rates and practices. The term is still used today to refer to areas where there may be a lack of clear regulatory authority over certain aspects of the energy industry.
The FPA closed the “Attleboro gap.”
In 1986 this act expanded FERC’s regulatory and enforcement powers?
What is the Electric Consumers Protection Act
The ECPA was enacted to increase the regulatory and enforcement powers of FERC, particularly in relation to hydropower projects.
These two government authorities, were created and used by the New Deal government as yardsticks to measure the electrical rates of private utilities.
What is the Tennessee Valley Authority (TVA) and the Bonneville Power Authority (BPA).
David E. Lillienthal, chairman of the TVA, argued that the yardstick approach led “to a realistic re-examination of the financial feasibility of low rates” throughout the country.
Before Phillips this former state utility regulator led the agency.
What is Pat Woods III?
He was the chairman of the Public Utility Commission of Texas. He was FERC's chairman from June 2001, to July 2005.
Section 18 of the FPA regulates this aspect of a hydroelectric facility.
What is Fish Passage?
In 1961, a report prepared by this President branded the 40-year-old agency as "the outstanding example in the Federal Government of the breakdown of the administrative process."
Who is John F. Kennedy?
As one scholar noted, "This history of the FPC demonstrates the great challenge of administrative management of energy in 20th-century America. The evolving technology of energy development; the dramatic fluctuations in prices, supply, and demand; the inability to successfully mediate corporate and public needs; and the Commission’s limited capabilities and ambiguous mission all guaranteed limited success."
Under this section of the FPA's sister statute, refunds are not available before the effective date of the Commission's ruling.
What is Section 5 of the Natural Gas Act.
NGA Section 5 is equivalent to FPA § 206. Under that section, FERC can initiate a complaint/investigation on its own motion or a complaint can be filed by a third party.
This electric company, led by Samuel Insull in the early 20th century, controlled numerous utilities and was considered one of the most prominent examples of an electric energy monopoly in the United States.
What is the Insull’s Commonwealth Edison Company (Commonwealth Edison or ComEd)
These are the FERC offices
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This 2016 U.S. Supreme Court case, involving a dispute over demand response programs in the wholesale energy market, upheld FERC's authority under the Federal Power Act to regulate these programs, marking a significant win for FERC and the demand response industry.
What is FERC v. Electric Power Supply Association?
This major disruption in 1965 began when a transmission line near Ontario, Canada caused a series of power outages, affecting over 30 million people in states including Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.
What is the Northeast blackout of 1965?