The Regulators

Regulation of the U.S. electricity transmission system takes place on multiple levels. This page sets out the various actors involved. It’s still under construction, so be sure to check back for updates!

 

1. Federal Energy Regulatory Commission

The Federal Power Act, as amended over the years, gives the Federal Energy Regulatory Commission authority primarily to regulate interstate transmissions of electricity by “public utilities.”[1] The Commission works to ensure that these transmissions and transactions are subject to “just and reasonable” nonpreferential rates.[2] Non-public utilities and government entities like Bonneville are not “public utilities” under the FPA, and are therefore beyond most of FERC’s regulatory authority.[3] However, through EPAct 1992 and 2005, Congress has given FERC ever more authority over transmission issues, both at the siting[4] and grid-access levels[5]—authority that FERC has implemented through various Orders.[6] With its transmission planning and mandatory cost allocation requirements, Order 1000 is FERC’s latest, and most assertive, use of this congressionally-delegated authority. Before this paper analyzes whether Order 1000 oversteps too far into Bonneville’s jurisdiction, it is first necessary to understand the extent of FERC’s authority.

FERC’s jurisdiction extends to nearly 75% of the grid. The remaining 25% is owned by other federal entities like Bonneville, as well as by municipal or cooperative utilities.[7] The Federal Power Act forms the basis of FERC’s authority over interstate electricity market regulation. FPA Section 205 requires public utilities engaged in wholesale transmissions to file rate filings with FERC, called “tariffs,” which list the rates, terms and conditions of the utility’s service.[8] One of FERC’s primary mandates is to ensure that such rates are “just and reasonable” and not unduly discriminatory.[9] Upon a finding that a utility’s tariff is “unjust, unreasonable, unduly discriminatory or preferential,” FERC is empowered to alter the tariff to avoid this unjust result.[10]

As explored further in The Story of the Grid, Congress has gradually expanded FERC’s ability to manage the transmission system and address constraints and reliability concerns. Most prominent among these statutory provisions is Section 211A, which was added to the Federal Power Act by the Energy Policy Act of 2005.[11] FPA 211A allows FERC to “require non-public utility transmission providers to provide transmission services on a comparable and not unduly discriminatory or preferential basis.”[12] In Order 1000, the Commission explicitly declined to resort Section 211A, but instead said that it would use the provision on a “case by case” basis, as necessary to enforce the Order.[13] FERC has invoked Section 211A only on one other occasion,[14] so its strength is still relatively untested.


[1] Id. § 824 (b), (e); see also Fed. Power Comm’n v. Fla. Power & Light Co., 404 U.S. 453, 462–63 (1972) (allowing FERC to exercise jurisdiction over intra-state electricity transmission as a result of its “commingling” with interstate electricity transmissions); Matthew R. McGuire, (Mis)Understanding “Undue Discrimination,” 19 Geo. Mason L. Rev. 549, 555 (2011-2012).

[2] 16. U.S.C. §§ 824d–824e, 824m (2012).

[3] Id. § 824(f); see also Bonneville Power Admin. v. FERC, 422 F.3d 908, 915–16 (9th Cir. 2005) (explaining the “huge” sweep of the FPA section 201(f) exemption for the “United States, State, political subdivision of a State, or agency or instrumentality”); but cf. Pac. Gas and Elec. Co. v. U.S., 105 Fed. Cl. 420, 424 (Fed. Cl. 2012) (holding that Bonneville and another Federal Power Marketing Agency had compromised their Section 201(f) exemptions by executing contracts with public utilities that incorporated by reference the utilities’ FERC-regulated tariffs).

[4] Michael Dworkin, et al., Energy Transmission and Storage, in Law of Clean Energy 531, 533 (Michael B. Gerrard, ed. 2011).

[5] Id. at 535–36.

[7] U.S. Dep’t of Energy, Energy Info. Admin., The Changing Structure of the Electric Power Industry 2000: An Update, 14 (2000).

[8] 16 U.S.C. § 824d (2012).

[9] Id. § 824e.

[10] Id. § 824e(a).

[11] Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594 (2005).

[12] Order No. 1000, supra note 17, at 815.

[13] Order No. 1000, supra note 17, at 19.

[14] Iberdrola Renewables, PacifiCorp, et al. v. Bonneville Power Administration, 137 FERC ¶ 61,185 (Dec. 7, 2011); see a discussion of this case in The Energy Policy Act of 2005 and FERC Order 890

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One thought on “The Regulators

  1. Pingback: Cost allocation elaboration: Illinois Commerce Commission v. FERC, Case Nos. 11-3421 (7th Cir. 2013) | TransMissives

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