FERC Basics

The Federal Energy Regulatory Commission regulates wholesale electricity markets and interstate transmission but has no authority over retail rates, distribution, or generation siting. This jurisdictional split, set by the Federal Power Act of 1935, means that the entity responsible for the overall market cannot control the pieces that determine whether new generation actually gets built and connected.

FERC's core powers: approving wholesale electricity rates, regulating interstate transmission, overseeing RTO/ISO market rules, and permitting interstate natural gas pipelines and LNG export facilities. FERC does not regulate: retail electricity rates (state PUCs), power plant construction permits (state and local), nuclear licensing (NRC), or distribution infrastructure (state PUCs).

The jurisdictional gap in action. FERC can approve a transmission line's rate treatment but cannot force a state to grant the right-of-way for construction. FERC can order RTOs to reform interconnection queues but cannot compel utilities in non-RTO states to join markets. FERC can set rules for wholesale competition but cannot prevent a state from subsidizing its preferred generation technology.

Why does this split matter for the energy transition?

Because transition bottlenecks cross jurisdictional lines. Interconnection queue reform (FERC) means nothing if state permitting (state authority) blocks the transmission needed to deliver new generation. Clean energy mandates (state) conflict with wholesale market rules (FERC) when subsidized resources distort capacity market prices. The federal-state split was designed for a simpler era and creates coordination gaps that slow nearly every major grid reform.

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