Jurisdiction for the electricity sector in the United States is divided between federal, state, and local jurisdiction. The jurisdictional divide between federal and state jurisdiction was established through the Federal Power Act (FPA) in 1935. On the federal side, the Federal Energy Regulatory Commission (FERC) - an independent federal agency - regulates the interstate transmission of electricity, natural gas, and oil. Public utility commissions in the states regulate retail rates and distribution services. Local governments in many states are responsible for siting and permitting as well as environmental impact regulation.
Some parts of the United State (the Northeast, Midwest, Texas, and California) are restructured competitive markets. These markets are run by independent system operators (ISOs) or regional transmission organizations (RTOs). The wholesale markets that encompass multiple states (with the exception of the Texas RTO, the Electric Reliability Council of Texas—or ERCOT) are regulated by FERC. FERC has oversight of all wholesale power transactions on the two large, interconnected grids: the eastern and western interconnects.
The rapid changes in the electricity sector over the past decade have increasingly blurred the formerly bright line between federal and state jurisdiction. As issues such as the participation of distributed energy resources in the wholesale markets and the treatment of state and federal subsidies in the regulatory construct are being adjudicated by FERC, it is important for State Energy Offices and state governments to understand how proceedings at FERC are impacting state energy policy and state energy planning.
NASEO supports State Energy Offices by providing resources and information on ongoing proceedings at FERC and on wholesale market issues through webinars and research.