Electric co-ops were formed to serve members with affordable, reliable and safe power. But what role does the federal government play in this? The Federal Energy Regulatory Commission (FERC) is an independent agency in Washington, D.C., with authority over the transmission and wholesale sale of electricity in interstate commerce.
The commission also regulates the interstate commerce of natural gas and oil and the siting of natural gas and hydropower facilities. Basically, FERC oversees how energy moves across the country by high-voltage power lines or large pipelines.
So, FERC doesn’t regulate your local distribution co-op. But it does exert authority over five generation and transmission co-ops (including Dairyland Power Cooperative that serves areas in Illinois) and all the wholesale electricity markets where co-ops buy their power supply. By setting those markets’ transmission rates, which electric power companies — including co-ops — must pay, the agency can ultimately influence retail prices.
The commission’s regulations aim at maintaining fair prices within the wholesale electricity markets run by six regional transmission organizations (RTOs) and independent system operators (ISOs). These FERC-regulated RTOs and ISOs manage parts of the national electric grid.
FERC also monitors these markets for energy supply manipulation that can hike prices. When things go wrong, the commission can investigate and levy penalties. Overall, FERC sides with conserving energy and encourages utilities to find ways to reduce demand.
The commission largely lacks authority over electric transmission in terms of siting and construction. That falls under state and local authorities. FERC’s authority over building generation is also limited to only approving, licensing and inspecting hydropower plants.
Regarding natural gas, FERC has the final say in construction and operation of liquefied natural gas terminals, pipelines and storage facilities. It reviews gas projects in terms of their impact on the environment and the economy.
And, being a public agency, keep in mind all FERC’s final decisions can be challenged in court.
When it comes to grid reliability, the buck stops with FERC. The commission directs the national grid watchdog — North American Electric Reliability Corporation (NERC) — and enforces its mandatory reliability rules and requirements on grid operators and owners of the U.S. bulk power system, including utilities and energy producers.
The commission tasked NERC as the electric reliability organization for the continental U.S. after Congress called for a single point of contact following the historic blackout of Aug. 14, 2003, which left more than 50 million people in the Northeast and parts of the Midwest without electricity for several hours to several days.
FERC can require NERC to set new reliability standards or update current rules as needed to protect the grid’s ability to serve today’s increased demand.
So, who is FERC? The body is made up of five commissioners appointed by the president and confirmed by the U.S. Senate for 5-year terms. The chair presides over open public meetings on the third Thursday of the month, where the commission votes on orders to act on or approve projects or set precedents. You can watch these meetings live at home from the link on the FERC website.
While its regulatory influence may not have a hand directly in co-op operations that serve consumers, FERC does have a role in how co-ops can best serve their members by upholding grid reliability, safety and keeping costs affordable. 
