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Nov 16, 2022 HData Team

Guide to the Federal Energy Regulatory Commission (FERC)

What is FERC?

The Federal Energy Regulatory Commission (FERC) regulates the United States’ energy industry to keep prices reasonable for consumers, avoid monopolistic practices, assist the government’s efforts to develop sustainable energy resources, and ensure the energy industry players adhere to environmental standards.


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The United States is a global energy behemoth — the US consumes 7.49 billion barrels of oil annually (i.e. roughly 20% of the world’s total production) and 30.28 trillion cubic feet of natural gas a year.

Combined with sources like coal, natural gas, and hydropower, the U.S. uses up just over 3,870 TWh of energy per year—that’s roughly six times as much electricity as Africa consumes in a year.

Behind that scale of operations is a network of solar arrays, dams and hydroelectric stations, nuclear plants, geothermal power stations, and wind farms feeding into the grid. There’s an equally titanic maze of pumping stations, oil and gas pipelines, refineries, and high-voltage power lines that receive power from wherever it’s generated across the U.S. all the way to your house where you’re flipping on a light switch.

America’s FERC makes that network possible.

What is the Federal Energy Regulatory Commission Responsible For?

The agency might seem like yet another government agency, but it’s scope is far-reaching and covers:

  1. Monitoring and regulating interstate transmission of oil, gas, and electricity,
  2. Keep tabs on the energy industry’s infrastructure backbone, such as America’s 640,000 miles of high-voltage transmission lines, 91k dams, and a network of over 506,000 miles of interstate oil and gas pipelines.
  3. Research and approve permits for energy projects, including dams, interstate storage and pipeline facilities,
  4. Regulate rates for carriers engaged in interstate energy transport to ensure equal access and avoid monopolistic practices such as price fixing, cartelization, etc
  5. Assess the environmental impact of proposed (and ongoing) energy projects, pursuant to environmental statutes such as the Clean Water Act, the Coastal Zone Management Act, the Endangered Species Act, the National Preservation Act, etc.

To understand the Federal Energy Regulatory Commission’s role in America’s energy industry, think of the agency as an umpire that mediates between energy stakeholders first, their customers, and the environment to ensure the United States’ energy resources are produced efficiently and distributed fairly and in any environmentally-conscious manner.


HData has helpful FERC reporting solutions.

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A Brief History of the Federal Energy Regulatory Commission

The Federal Energy Regulatory Commission was established on 1 October, 1977, and according to its charter, it’s designed to regulate the transmission and wholesale sale of electricity and fossil fuels across states. The agency also oversees development projects, such as proposals to build hydropower plants, liquified natural gas (LNG) terminals, interstate gas pipelines, and storage facilities.

The agency’s history began in 1920 when the Federal Power Commission was established by Congress to oversee the government’s hydropower development efforts. FPC would end up becoming FERC in 1935, and has continued to evolve over its lifetime, as a result of legislations such as:

  1.  The Federal Power Act of 1920, which created FERC’s predecessor FPC and gave the agency the authority to regulate interstate operations of electric power and natural gas operators
  2. The Natural Gas Act of 1938, which aimed to regulate the rates charged by interstate natural gas transmission companies (i.e. pipeline operators)
  3. Order 888 of 1996, which requires that public utilities (such as electricity transmission companies) provide open access transmission service comparable to that which they reserved for their internal usage, and
  4. The Energy Policy Act of 2005, which essentially gives FERC eminent domain rights to circumvent state and local governments in order to speed up energy projects, especially in underserved regions.

A Look at Historical FERC Regulatory Actions

Over the course of its existence, the Federal Energy Regulatory Commision has had to investigate, litigate with, and fine American energy operators for fraudulent conduct, environmental damage, price fixing, or any other activity it determines to be detrimental to the development of the nation’s energy industry.

  1. J. P. Morgan Chase

In the same year, the Federal Energy Regulatory Commission fined banking giant J. P. Morgan $410 million for deliberately manipulating energy markets, and circumventing loopholes in the software used by electricity wholesalers in order to bid lower for electricity and collect substantially higher payments when the electricity supply was produced the next day.

The bank agreed to pay a $285 million civil penalty and forfeit $125 million in profits.

  1. GreenHat Energy

The Federal Energy Regulatory Commission sued Texas-based GreenHat Energy for market manipulation, alleging that GreenHat Energy sent false price signals into the United States largest energy market (i.e. Pennsylvania-New Jersey-Maryland Interconnection, or PJM) by purchasing Financial Transmission Rights (FTRs) with minimal collateral.

GreenHat Energy deliberately made false representations to PJM to avoid getting margin called, and rigged FTR auctions, both of which cost grid operators to lose roughly $180 million.

The energy regulator ordered GreenHat to pay $229 million in civil penalties and to disgorge $13.1 million in unjust profits. After it was determined that GreenHat’s founders didn’t have the financial ability to settle the fine, the penalty was negotiated down to $1.4 million.

HData’s FERC Compliance Solutions

Looking at the Federal Energy Regulatory Commission’s regulatory history tells us one thing: FERC isn’t shy about handing out penalties for questionable practices by energy players —even if it can't be proved conclusively, or if you infringe unintentionally.

The only way to avoid the agency’s scrutiny is to actively submit to the required compliance and keep provable records of your regulatory history.


HData has helpful FERC reporting solutions.

Request a demo today


We built HData as an all-in-one FERC compliance stack designed to help energy players maintain accurate regulatory records, stay compliant with industry standards, and to understand how changes in the FERC’s strategy (or your industry) stands to affect your company’s operations.

Whether you’re:

  • An internal energy advisor who needs detailed insights into your peers’ energy footprint in order to prepare detailed rate proposals or reports,
  • A financial controller who needs meaningful metrics (i.e. on a per customer, per volume, and per revenue dollar basis), or
  • A business development executive that needs concrete metrics that you can use to report your ESG footprint, track your peers’ performance, or figure out how much you should be reinvesting into your infrastructure

—HData provides the data that makes it possible. HData Compliance is the only filing solution built from the ground up for annual and quarterly FERC reports.

Find out how we simplify FERC compliance with a single platform where you can manage all the data you need to meet regulatory benchmarks.

Published by HData Team November 16, 2022