Glossary

Federal Energy Regulatory Commission (FERC)

The Federal Energy Regulatory Commission (FERC) is an independent agency in the United States, led by commissioners who are appointed by the President. The FERC’s objective is to regulate the energy markets to ensure that they operate in a fair and competitive manner and provide consumers with reliable and affordable access to energy. 

What are the Main Roles of the FERC?

The FERC is responsible for the following:

  • Regulating the transmission of electricity, natural gas, and oil between states.
  • Overseeing the construction of new hydroelectric projects.
  • Approving (or denying) applications for energy infrastructure projects including liquified natural gas (LNG) terminals or pipelines.
  • Setting rates for interstate wholesale of electricity and natural gas. 

Part of the agency’s mission is to protect both consumers and the environment by ensuring that the energy industry’s operational practices do not cause any harm. 

Who Must Comply with FERC Regulations?

Any US company that transmits or sells electricity, oil, natural gas, or hydropower across state lines is regulated by the FERC, and is required to capture and archive communications in order to comply with FERM rules. This does refer only to those companies that are selling energy wholesale, as FERC does not get involved with retail sales of electricity or natural gas to consumers. 

How Can Energy Companies Comply with FERC Regulations?

In general, the FERC does not require that the companies under its auspices have a compliance program in place. However, it is highly recommended and the presence of a compliance program is looked upon favorably when the Commission is investigating a potential violation. Even if a violation is found, the penalty may be less severe if there are some safeguards in place. 

To be in full compliance, companies are required to follow the rules and guidelines as defined by the Federal Power Act, and other similar legislation. FERC has the power to investigate any potential violations of these acts. 

Best practices for companies to follow to ensure they are in compliance include:

  • Internal audit and risk assessment – it’s important for energy companies to do routine risk assessments of their operations in order to identify any areas that may need improvement. This way, the company can be sure that they are keeping up to date with regulations and reducing the risk of being penalized. 
  • Training – all relevant employees should receive regular training on what it means to be FERC-compliant and how to stay consistent.
  • Invest in Software – there are plenty of technological solutions that can make it easier to track relevant data, prepare reports for regulatory bodies, and prove compliance when necessary. 

For companies required to capture and archive communications in order to comply with FERC rules or those of any other regulatory body, LeadXpert can help – book a demo to learn how!