Federal Power Commission
The Federal Power Commission (FPC) was established to regulate the development and licensing of hydroelectric power in the United States, beginning with its creation under the Federal Water Power Act of 1920. It became an independent, bipartisan commission in 1930, with five members nominated by the president and confirmed by the Senate. The FPC's responsibilities expanded over time to include overseeing the transport and production of electricity and natural gas, ensuring consumer protection against unfair pricing through regulatory mechanisms. It enacted surveillance programs and required utilities to file price schedules, allowing the commission to change unreasonable energy prices and monitor capital expenditures.
In 1935, the Federal Power Act broadened the FPC's jurisdiction to encompass various aspects of river development, energy generation, and related environmental management. The commission's authority was further enhanced by subsequent legislation, including the Public Utility Holding Company Act and the Natural Gas Act. In 1977, the FPC was reorganized into the Federal Energy Regulatory Commission (FERC), which now oversees a wide range of energy projects and market regulations, including imposing penalties for market manipulation. FERC's primary mission remains the maintenance of reasonable energy rates, with its decisions now subject to federal court review rather than congressional or presidential approval.
Federal Power Commission
Identification Independent commission of the U.S. government
Date Established on June 23, 1930
The Federal Power Commission (FPC) was initially created as part of the Federal Water Power Act of 1920, and its jurisdiction continued to expand throughout the 1930’s with the passage of additional acts of Congress. Its primary purpose was to regulate the construction, development, licensing, and pricing of hydroelectric power and natural-gas utilities.
Prior to the Federal Power Act of 1935, the primary purpose of the FPC had been the regulation and licensing of the development of hydroelectric power on public lands and navigable bodies of water within the United States and of any dams owned by the United States. The FPC had first been created by the Federal Water Power Act of 1920. However, this act had not established an independent commission. Not until June 23, 1930, was the FPC formally established as an independent and bipartisan committee. It consisted of five members nominated by the president; nominations required the approval of the Senate. The FPC’s initial duties dealt with hydroelectric projects, fish and wildlife, natural gas, and interstate electrical utilities.
Throughout the years, the most important responsibility of the FPC has been the regulation of companies that transport and produce electricity and natural gas; this regulation ensures that consumers are protected from unfair prices. In order to accomplish this mission, the FPC has enacted surveillance programs using price schedules. Each year, at least two thousand of these price schedules are filed in order to meet the price regulation requirements of the FPC. In addition to filing price schedules each year, public electric and natural-gas utilities are required to provide thirty-days notice to the FPC if any changes in energy rates or energy charges occur. The FPC has the ultimate authority to change any energy price it deems to be unreasonable, and it also has the authority to monitor the usage of capital expenditures in daily operations.
In addition to monitoring energy prices in order to protect consumers and the economy, the FPC requires that applicants for licenses must comply with all state laws related to the construction or maintenance of any project involving electricity, fish and wildlife, or natural gas. These licenses may be issued for up to fifty years, and the FPC determines both the original cost of the project and any additions to the licensed project.
In 1935, Congress enacted the Federal Power Act in order to specifically support the development of rivers to supply flood control, energy generation, water for human consumption, fish and wildlife management, and recreation. The jurisdiction of the FPC was further expanded by the Tennessee Valley Authority Act, the Bonneville Act, the Fort Peck Act, the Public UtilityHolding Company Act of 1935, the Flood Control Act of 1938, and the Natural Gas Act of 1938. In 1977, Congress reorganized the FPC into the Federal Energy Regulatory Commission after numerous problems such as the Organization of the Petroleum Exporting Countries (OPEC) embargo and power-grid outages occurred during the 1970’s.
Impact
The Federal Energy Regulatory Commission has jurisdiction over sixteen hundred hydroelectric projects and the transmission and wholesale pricing of natural gas and electricity. It works with the U.S. Coast Guard. In 2005, the Energy Policy Act gave the commission the authority to impose penalties for any manipulation of the natural-gas and electricity markets. The decisions made by the commission are no longer subject to approval by Congress or the president; instead they are reviewed by the U.S. federal courts. The primary mandate for the commission continues to be the maintenance of reasonable and nondiscriminatory energy rates for U.S. consumers.
Bibliography
Federal Power Commission. Uniform System of Accounts Prescribed for Public Utilities and Licensees Subject to the Provisions of the Federal Power Act. Ann Arbor: University of Michigan Library Press, 2009.
MacAvoy, Paul W. “The Effectiveness of the Federal Power Commission.” Bell Journal of Economics and Management Science 1, no. 2 (1970): 271-303.
Seavy, Clyde L. “Functions of the Federal Power Commission.” Annals of the American Academy of Political and Social Science 201 (1939): 73-81.