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Definition

Federal Energy Regulatory Commission (FERC)

Definition - What is FERC?

The Federal Energy Regulatory Commission (FERC) is a United States government agency, established in 1977 to oversee the country's interstate transmission and pricing of a variety of energy resources, including electricity, natural gas and oil.

Under the Energy Policy Act of 2005, FERC was granted the authority to enforce regulations concerning the reliable availability of energy resources. The Commission is tasked with assisting consumers in obtaining reliable, efficient and sustainable energy services at a reasonable cost through appropriate regulatory and market means by:

1. Ensuring that rates, terms and conditions are just, reasonable and not unduly discriminatory or preferential.

2. Promoting the development of safe, reliable and efficient energy infrastructure that serves the public interest.

FERC's five Commissioners are appointed by the President of the United States with the advice and consent of the Senate. One member of the Commission is designated by the President to serve as Chair and FERC's administrative head. Commissioners serve five-year terms and have an equal vote on regulatory matters. To avoid any undue political influence or pressure, no more than three commissioners may belong to the same political party. The Commission is funded through costs recovered by the fees and annual charges from the industries it regulates. To maintain FERC's independence as a regulatory agency capable of providing fair and unbiased decisions, Commission decisions are not reviewed in advance by the President or Congress.

In 2006, FERC named the North American Electrical Reliability Corporation (NERC) as the government's Electrical Reliability Organization (ERO), thereby granting NERC the power to oversee and regulate the electrical market according to these reliability standards. Although NERC is the organization that audits power companies and levies fines for non-compliance, the authority behind NERC's decisions comes from FERC.

Part of this definition is reprinted with the permission of the U.S. Department of Energy.  Visit the official DOE website for more information on Smart Grids initiatives. 

Learn more:

Getting to know the FERC/NERC CIP standards - The standards themselves are primarily focused on programs and processes and not so much on implementing specific technologies.

NERC CIP training: Understanding 'critical cyber asset identification' - CIP-002 through CIP-009 provide the minimum requirements for utilities and other affected enterprises to ensure the Bulk Electric System (BES) is effectively protected from cyberattacks and faults.

1. Ensuring that rates, terms and conditions are just, reasonable and not unduly discriminatory or preferential.

2. Promoting the development of safe, reliable and efficient energy infrastructure that serves the public interest.

This was last updated in April 2010

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