Federal Energy Regulatory Commission
overview
Formed	October 1, 1977 (1977-10-01)
Preceding	Federal Power Commission
Jurisdiction	U.S. Government
Headquarters	Washington, D.C.
executive	Jon Wellinghoff, Chairman
Parent	Department of Energy
Website
www.ferc.gov

The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. FERC also reviews and authorizes liquefied natural gas (LNG) terminals, interstate natural gas pipelines and non-federal hydropower projects.

History[link]

A predecessor agency, the Federal Power Commission, was founded in 1930 to allow cabinet members to coordinate federal hydropower development.

In 1935, the FPC was transformed into an independent regulatory agency with five members nominated by the President and confirmed by the Senate. At that time the FPC regulated both hydropower and interstate electricity.

In 1938, the Natural Gas Act gave FPC jurisdiction over interstate natural gas pipelines and wholesale sales. In 1942, this jurisdiction was expanded to cover the licensing of more natural gas facilities. In 1954, the Supreme Court decision in Phillips Petroleum Co. v. Wisconsin extended FPC jurisdicition over all wellhead sales of natural gas in interstate commerce.

In response to an energy crisis, Congress passed the DOE Organization Act in 1977, which consolidated various energy-related agencies into a Department of Energy. Congress insisted that a separate independent regulatory body be retained, and the FPC was renamed the Federal Energy Regulatory Commission, preserving its independent status "within" the Department.^[1] FERC was also given added responsibility to hear appeals of DOE oil price control determinations and to conduct all "on the record" hearings for DOE.^[2] As a result, DOE does not have any administrative law judges. As a further protection, when DOE proposes a rulemaking, it must refer the proposal to FERC, and FERC can take over the proceeding if FERC determines that the rulemaking "may significantly affect" matters in its jurisdiction.^[3] The DOE Act also transferred the regulation of interstate oil pipelines from the Interstate Commerce Commission to FERC.^[4] However, the FERC lost some jurisdiction over the imports and exports of gas and electricity.

In 1978, FERC was given additional responsibilities for harmonizing the regulation of wellhead gas sales in both the intrastate and interstate markets. FERC also administered a program to foster new cogeneration and small power production under the Public Utilities Regulatory Policy Act of 1978.

In 1983, Congress ended federal regulation of wellhead natural gas prices. At this time, FERC undertook to bring greater competition to both the natural gas and electric industries.

The Energy Policy Act of 2005 expanded FERC's authority to impose mandatory reliability standards on the bulk transmission system and to impose penalties on entities that manipulate the electricity and natural gas markets. The Energy Policy Act of 2005 gave FERC additional responsibilities as outlined in FERC's Top Priorities and updated Strategic Plan. As part of that responsibility, FERC:

• Regulates the transmission and sale of natural gas for resale in interstate commerce;
• Regulates the transmission of oil by pipelines in interstate commerce;
• Regulates the transmission and wholesale sales of electricity in interstate commerce;
• Licenses and inspects private, municipal, and state hydroelectric projects;
• Approves the siting of and abandonment of interstate natural gas facilities, including pipelines, storage and liquefied natural gas;
• Ensures the reliability of high voltage interstate transmission system;
• Monitors and investigates energy markets;
• Uses civil penalties and other means against energy organizations and individuals who violate FERC rules in the energy markets;
• Oversees environmental matters related to natural gas and hydroelectricity projects and major electricity policy initiatives; and
• Administers accounting and financial reporting regulations and conduct of regulated companies.

Position within the government[link]

FERC is an independent regulatory agency within the United States Department of Energy. Neither the President nor Congress reviews FERC decisions. All FERC decisions are reviewable by the federal courts. FERC is also self-funding. The Commission pays for itself by recovering costs directly from the industries it regulates through annual charges and fees.

FERC is independent of the Department of Energy, but DOE may intervene just like any other party in FERC proceedings. FERC activities "shall not be subject to further view by the Secretary [of Energy] or any officer or employee of the Department."^[5]

In recent years, the FERC has been promoting the voluntary formation of Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) to eliminate the potential for undue discrimination in access to the electric grid. However since the passage of new energy legislation, it has aggressively developed regulations to implement key provisions of the new law dealing with LNG terminals, electric reliability, Public Utility Holding Company Act of 1935 repeal and implementation of the Public Utility Holding Company Act of 2005, new merger regulations and new anti-market manipulation regulations.

FERC has also been heavily involved in the California electricity crisis and in investigating allegations of electricity market manipulation by Enron and other energy companies. FERC has collected over $6.3 billion from California electric market participants by facilitating settlements. FERC is also working with Canadian energy officials to facilitate processing of a proposed Alaskan Natural Gas Pipeline, which would bring natural gas from Alaska's North Slope to the lower 48 States.

FERC regulates approximately 1,600 hydroelectric projects in the U.S. It is largely responsible for permitting the construction of a large network of interstate natural gas pipelines. FERC also works closely with the United States Coast Guard in reviewing the safety, security and environmental impacts of proposed LNG terminals and associated shipping.

Commissioners[link]

Jon Wellinghoff currently serves as Chairman of the Commission (term expires on June 30, 2013). The Commissioners are:

• Philip D. Moeller (term expires on June 30, 2015)
• John Norris (term expires on June 30, 2012)
• Cheryl LaFleur (term expires on June 30, 2014)

See also[link]

• United States Energy Law
• High-voltage direct current
• Custody transfer
• North American Electric Reliability Corporation (NERC)

References[link]

External links[link]

• Official site
  • Electricity
  • LNG Terminals
  • Natural Gas
  • Hydroelectric
• Federal Energy Regulatory Commission Meeting Notices and Rule Changes from The Federal Register RSS Feed
• Reporting and Compliance with FERC and NERC: Best Practices for Meeting the Challenge

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Jon Wellinghoff (born May 30, 1949) is an American attorney and energy expert who has been at the forefront of cutting-edge, energy issues such as renewable integration, plug-in electric vehicles, and the modernization of the nation’s electric grid. Currently he serves as the 13th chairman of the Federal Energy Regulatory Commission [1], an independent agency that regulates the interstate transmission of electricity, natural gas, and oil. FERC also reviews proposals to build liquefied natural gas (LNG) terminals and interstate natural gas pipelines and licenses hydropower projects.

Background[link]

Jon Wellinghoff was born in Santa Monica, California, and moved to Reno, Nevada, at the age of four. He attended the University of Nevada-Reno, earning a B.S. in mathematics in 1971. The following year he earned a Masters degree in teaching mathematics from Howard University and stayed in Washington, DC, to attend Antioch School of Law where he earned his J.D. in 1975.

Wellinghoff returned to Nevada where he would specialize in energy law for more than 30 years. In private practice, he focused exclusively on cases pertaining to renewable energy and energy efficiency, causes he continues to promote as FERC Chairman. He was the primary author of Nevada’s Renewable Portfolio Standard (RPS), one of two state RPS programs to receive an “A” rating from the Union of Concerned Scientists.

Wellinghoff has also held a variety of positions in the public sector, providing legal counsel on energy issues to, among others, the U.S. Senate Commerce Committee, the Federal Trade Commission and the Nevada Public Utility Commission.

Consumer protection was another hallmark of Wellinghoff’s career prior to joining FERC. In his hometown of Reno, he held the position of Deputy District Attorney in the Washoe County District Attorney’s Consumer Fraud division. His work on behalf of consumers helped make him Nevada’s first Consumer Advocate for customers of public utilities. In that role, he argued for the public in cases before FERC, the Nevada Supreme Court and what is now the Nevada Public Utility Commission.

Wellinghoff is married to Karen Galatz and he has four children, Andrea, Sarah, Jules, and Jacob, and three grandchildren.

FERC Commissioner[link]

In 2006, Wellinghoff was appointed by the President and confirmed by the Senate as one of the five commissioners at the FERC.

As commissioner, Wellinghoff was influential in moving FERC towards prioritizing the removal of barriers to integration of renewable energy into the electric grid. He has been an advocate of “demand response” and “smart grid” technologies that will facilitate coordination and communication between electricity consumers and providers, allowing consumers to have greater control over their energy usage and the associated costs.

Wellinghoff was an early proponent of improving energy infrastructure to accommodate future demands from automobiles powered primarily by electricity. He coined the phrase “Cashback Car” in a contribution to the Brookings Institution publication, “Plug-In Electric Vehicles: What Role for Washington?” In it, he envisioned a future where drivers not only save money by switching from gasoline but are paid by utilities for use of their batteries to provide and store electricity. Wellinghoff explained that while the necessary technology already exists, improvements to infrastructure will be needed to make the “Cashback Car” a reality.

In 2008, the Alliance to Save Energy honored Wellinghoff with its prestigious Charles Percy Award for Public Service. The non-profit group bestowed the award “in recognition of [his] decades of outstanding public service and his expertise and leadership on energy efficiency as the nation confronts the dual challenge of electricity supply security climate change.”

During his time as commissioner, Wellinghoff also received the EnerNoc Thought Leadership Award at a summit on energy efficiency and the Award for Leadership in Demand Response from the U.S. Demand Response Coordinating Committee.

FERC Chairman[link]

On March 19, 2009, President Barack Obama named Wellinghoff as FERC Chairman. Wellinghoff quickly established three top priorities for his term: the integration of renewable energy sources, including wind, solar geothermal and hydrokinetic energy, into the electric grid; the implementation of advanced technologies aimed at making the use and distribution of energy more efficient; and the promotion of demand-side energy practices, including real-time electricity pricing and the use of electric cars. All three of these priorities will emphasize improvements to the overall efficiency of the nation’s energy infrastructure.

Wellinghoff has vowed to pursue his priorities through the implementation of regulatory practices that ensure a fair and competitive energy market, pointing out that it is through competitive energy markets that consumers will reap the full benefits of new technology.

To promote policies that will increase renewable energy and improve energy efficiency, Wellinghoff created a new office within the Commission: the Office of Energy Policy and Innovation. The office is tasked with providing leadership in the development and formulation of policies and regulations to address emerging issues affecting wholesale and interstate energy markets.

The potential of renewable energy resources to expand our energy supply while decreasing adverse environmental impact has been an interest of Wellinghoff throughout his career. Obstacles remain, however, to the full utilization of wind, solar, geothermal, and hydrokinetic energy. While these resources provide a growing share of America’s energy, they remain hampered by their often remote proximity to major population centers and other impediments. Wellinghoff has made the integration of these resources into the energy market a key aspect of his agenda.

Renewable integration will also be facilitated by another of the Wellinghoff’s priorities, the development and implementation of advanced broadband and digital technologies collectively referred to as “smart grid.” This push to modernize the nation’s energy infrastructure will allow consumers and providers to make more informed decisions about how they use electricity. Problems stemming from the variable nature of some renewable energy technologies would be reduced if grid operators could easily rely on alternatives when encountering high demand or unfavorable natural conditions.

On July 16, 2009, the Commission released a Smart Grid Policy Statement setting priorities for the adoption of new standards and practices that will best enable FERC to facilitate the widespread and expedited use of smart grid technology.

A major component of an effective smart grid will be improved demand response capabilities, the third of Wellinghoff’s top priorities. Wellinghoff has labeled demand response the “killer app” for the smart grid. This form of enhanced, two-way communication would allow electricity providers to pay consumers to use less electricity. At times of peak demand (and peak prices) and other times of grid stress or need, consumers could respond by modifying their usage. Grid operators could, in turn, respond with more efficient management of available resources and avoid the high expenses associated with putting another power plant on-line to generate the electricity necessary to meet demand. Less wasted electricity would help lower prices for everyone and foster a more efficient and environmentally sustainable market. FERC’s most recent assessment of the country’s demand response potential concluded that peak demand could be reduced by as much 188 GW, or roughly 20%, by 2019.

Wellinghoff has worked to create a receptive environment for new and emerging energy technologies such as hydrokinetic energy. Under his leadership, the Commission has continued to collaborate with the Department of the Interior to incubate the growth of this technology. This partnership will facilitate the development of offshore hydrokinetic projects as well as wind and solar projects. Similarly, the Commission has signed agreements with states such as Maine and Washington that will help fast-track new projects while ensuring that associated environmental concerns are given careful agreement.

Jon Wellinghoff is not without critics, who have characterized him as an overzealous advocate for demand-side resources that lacks the objectivity appropriate for any chairman of a major federal regulatory commission. In particular, they cite his public comments at the Alliance to Save Energy Conference, held September 13, 2010, in which he described himself as "...a soldier fighting in an epic battle for demand response."^[1][2]

Under Wellinghoff's leadership the FERC issued Order 745 on March 15, 2011, which prescribes how providers of demand response are to be compensated in the organized wholesale markets. This order is highly controversial and is opposed by numerous energy economists, including Professor William W. Hogan of Harvard's John F. Kennedy School. These experts assert that order 745 overcompensates demand response and is likely to produce excessive curtailment of electricity usage and U.S. economic output at a time of high unemployment. Furthermore, they claim that these subsidies will primarily benefit large industrial companies but will be paid for by residential customers and small businesses. Several parties, including the State of California, have filed suit against the FERC on grounds that Order 745 is anticompetitive and encroaches on the right of states to regulate retail sales of electricity. Order 745 was not unanimously supported at the FERC; commissioner Phillip D. Moeller strongly opposed it and filed a blistering dissenting opinion. An enlightening debate regarding the economic efficiency and fairness of Order 745 appeared in a series of articles published in The Electricity Journal.^[3][4][5]

Selected publications[link]

Jon Wellinghoff, “The Cashback Car,” in Plug-In Vehicles: What Role for Washington? Ed. David Sandalow (Washington, DC: Brookings Institution, 2009), pp. 65–85. Available online at: http://www.ferc.gov/about/com-mem/wellinghoff/05-01-09-Wellinghoff.pdf

Jon Wellinghoff and David Morenoff, “Recognizing the Importance of Demand Response: The Second Half of the Wholesale Electric Market Equation,” Energy Law Journal, Volume 28, No. 2. November, 2007 (pp. 389–419). Available online at: http://www.ferc.gov/about/com-mem/wellinghoff/energy-law-journal-wellinghoff.pdf

Jon Wellinghoff and David Morenoff, “Facilitating Hydrokinetic Energy Development through Regulatory Innovation,” Energy Law Journal, Volume 29. November, 2008 (pp. 397–420). Available online at: http://www.felj.org/docs/elj292/397_-_hydrokinetics-clean_final_print_11-3-08.pdf

Jon Wellinghoff, Jim Combs, Carl Pechman and Marty Ringo. Geothermal Development on Military Lands: Development Opportunities Through the Public/Private Partnership Model. Contract to the US Navy Geothermal Program Office (September, 2003).

Jon Wellinghoff, The System Approach to Commercial Lighting. Southern California Edison Lighting Course Manual (October, 1992).

Further References[link]

1. ^ Lynn Doan, "Wellinghoff: I'm a 'soldier' fighting in an 'epic' battle for demand response," SNL (September 14, 2010)
2. ^ "Wellinghoff: Epic Battle," Energy Washington NewsRoom Blog (September 14, 2010).
3. ^ Jonathan Falk, Paying For Demand Response at the Wholesale Level, The Electricity Journal, November 2010, Vol. 23, Issue 9, pp. 13-18.
4. ^ Robert Borlick, Paying For Demand Response at the Wholesale Level: The Small Consumer's Perspective, The Electricity Journal, November 2011, Vol. 24, Issue 9, pp. 13-19.
5. ^ Constantine Gonatas, Areas of Congruence, Yes, But 'Pseudo-Agreement' on LMP, The Electricity Journal, Jan./Feb. 2012, Vol. 25, Issue 1, pp. 1-4

Priorities as Chairman: http://www.ferc.gov/news/statements-speeches/wellinghoff/2009/04-16-09-wellinghoff.asp

Senate testimony on climate change: http://www.ferc.gov/congress/cong-test/2009/08-06-09-wellinghoff.pdf (video: http://www.ferc.gov/multimedia/08-14-2009-wellinghoff.wmv)

Statement on Smart Grid Policy Statement: http://www.ferc.gov/news/statements-speeches/wellinghoff/2009/07-16-09-wellinghoff-E-3.asp

House testimony on transmission: http://www.ferc.gov/EventCalendar/Files/20090612113050-06-12-09wellinghoff-Testimony.pdf

Announcement of OEPI: http://www.ferc.gov/news/headlines/2009/2009-2/05-21-09-announcement.pdf

Interview with National Journal on a “Greener FERC”: http://www.ferc.gov/news/statements-speeches/wellinghoff/2009/04-03-09-wellinghoff-nationaljournalinterview.pdf

White House Press Release on Wellinghoff appointment: http://www.whitehouse.gov/the_press_office/President-Obama-Announces-More-Key-Administration-Posts-3/19/09/

External links[link]

• http://www.washingtonpost.com/wp-dyn/content/article/2009/03/20/AR2009032003194.html
• http://www.windpowernevada.com/about/
• http://www.technologyreview.com/business/40020/#.T5Xs-KiXQkg.mailto

v t e FERC Commissioners Curtis/Sheldon ( Hall · Holden · Hughes · Sheldon2 ) · Butler ( Hughes · Richard · Sousa ) · O'Connor/Sousa ( Hughes · Naeve · Sousa2 · Stalon · Trabandt ) · Hesse ( Langdon · Moler · Naeve · Stalon · Trabandt ) · Allday ( Langdon · Moler · Terzic · Trabandt ) · Moler ( Allday1 · Bailey · Hoecker · Langdon · Massey · Santa · Trabandt ) · Hoecker ( Bailey · Breathitt · Massey · Santa ) · Hebert ( Breathitt · Brownell · Wood ) · Wood ( Breathitt · Brownell · Kelliher ) · Kelliher ( Brownell · Kelly ) · Wellinghoff ( Kelly · Moeller · Spitzer ) 1 Stayed on for a few months after transition 2 Briefly served as acting chairman