The Energy Regulation and Markets Review - Stikeman Elliott

United States
The Nuclear Regulatory Commission (‘the NRC’) is an independent federal
regulatory agency established by Congress to formulate policies and regulations governing
nuclear reactor and materials licensing and safety. The NRC’s authority is also granted,
and limited, by statutes, including the Atomic Energy Act of 1954, as amended, and the
Energy Reorganization Act of 1974, as amended.
The Department of Energy (‘the DOE’) is an executive department created in
1977 whose current mission ‘is to ensure America’s security and prosperity by addressing
its energy, environmental and nuclear challenges through transformative science and
technology solutions’. The DOE is led by the Secretary of Energy, a member of the
President’s cabinet.
Numerous other federal agencies and departments regulate certain aspects of the
US energy industry, including the Environmental Protection Agency, the Commodities
Futures Trading Commission, the Federal Trade Commission, and the United States
Departments of Agriculture, the Interior and Justice.
The distribution and retail sale of electric energy and natural gas are generally
governed by individual state regulatory agencies (often called public utility commissions,
public service commissions or ‘PUCs’) or municipal agencies. PUC jurisdiction is created
by state constitutions and statutes and, like most state regulation in the United States,
is also subject to the supremacy of the United States Constitution and federal statutes,
except in certain limited circumstances.
ii Regulated activities
Many aspects of energy development, generation, transmission/transportation, and
distribution in the United States are subject to some type of federal or state regulation.
FERC regulates the rates, terms and conditions of wholesale sales of electric energy
in interstate commerce and transmission service in interstate commerce. FERC also
regulates the rates, terms and conditions of natural gas and oil pipeline transportation
services. Entities making sales of jurisdictional products or services obtain rate approval
from FERC. FERC rates are typically either cost-based (i.e., based on the costs of
providing the product or service including a reasonable return on its equity investment)
or market-based (i.e., negotiated or market-determined). FERC also has extensive
regulatory authority over entities subject to its jurisdiction, including with respect to
issuances of securities, direct or indirect transfers of assets, accounting, recordkeeping
and reporting.
State PUCs generally regulate the rates, terms and conditions of retail sales and
distribution of electric energy and natural gas.
Siting approvals for the development and construction of new energy assets are
often required at the state or local government level, particularly with respect to electric
generation and transmission facilities. FERC has siting approval authority with respect
to hydroelectric generating facilities to be constructed on navigable waterways and
interstate natural gas pipelines and storage facilities. In 2005, Congress also gave FERC
‘backstop’ siting authority to issue permits for the construction of transmission lines
when the DOE identifies important transmission ‘corridors’ for the relief of transmission
constraints, although the scope of that authority remains unclear.
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