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The electric power industry is overseen by independent federal and state regulatory commissions. At the wholesale level, the Federal Energy Regulatory Commission (FERC) has jurisdiction.39 For retail sales to end-users, individual state public utility commissions (PUCs) determine policy. Although the federal-state dichotomy sharply delineates their powers, the state and federal commissions all follow the classic public utility paradigm in their regulatory approaches.

With the exception of Nebraska, every state and the District of Columbia regulates electricity distribution.40 State PUCs are generally responsible for issuing licenses or certificates of public convenience and necessity to generation and transmission plants and for granting permission to power companies to abandon service. State commissions also have the authority to set rates, to require prior notice of any proposed rate changes, to suspend proposed rates, and to launch inquiries into unreasonable rate hikes.

In exchange for their monopoly franchises, electric utilities agree to be held accountable to state PUCs representing the interests of ratepayers. PUCs also require the power companies within their reach to provide service in a non-discriminatory manner. Thus, any arbitrary classification among customer groups is subject to challenge. PUCs set billing, credit, and termination rules and hear consumer complaints in “shut-off” and other cases.41

State PUCs have broad authority.42 Their commissioners may be appointed by the governor or elected by the public, depending on the state. Commissions carry out varying roles ranging from the quasi-judicial to administrative. For example, by conducting an administrative rule-making proceeding, a commission may adopt detailed safety or service standards that the legislature has mandated be adopted. While the commission may allow the public an opportunity to submit comments, it most likely will not allow formal testimony or formally accept evidence. In this capacity, the commission is carrying out an administrative role. However, when the commission sets rates for a particular company, it will almost always hear witnesses, allow cross-examination, accept written documents into evidence, and allow parties to file briefs. Rate-setting hearings are quasi-judicial in that the procedures are similar to a court proceeding. A party that feels harmed by the decision may be able to appeal the decision to a court. Commissions may also adjudicate individual disputes between customers and the companies providing service. PUCs exercise broad discretionary authority over the public utilities that they regulate, but often subject to established rules and procedures.43

A significant exception to the PUC regulation of electric utilities is the regulation of rural electric cooperatives. These are primarily self-regulated and are discussed in more detail in this section and at §§ 1.1, supra, and 1.3, infra.


  • 39 {39} The FERC is responsible for regulating non-federal hydroelectric projects on federal waterways and the interstate transmission and sale at wholesale of electricity. Federal Power Act, 16 U.S.C. §§ 797–823d, 824 (regulation of electricity and hydroelectric resources, respectively). See Charles F. Phillips, The Regulation of Public Utilities: Theory and Practice 644 (1993).

    Most transmission is thus FERC-regulated. However, transmission within Texas is intrastate and thus outside FERC jurisdiction. For a discussion of the need for interstate and intrastate jurisdictional entities to be treated separately for rate purposes, see Smyth v. Ames, 169 U.S. 466, 18 S. Ct. 418, 42 L. Ed. 819 (1898), modified on other grounds, 171 U.S. 361 (1898).

  • 40 {40} Nat’l Ass’n of Reg’l Util. Comm’rs, Profiles of Regulatory Agencies of the United States and Canada, Yearbook 1991–1992, at 352–56 (1992).

    All generation and distribution facilities in Nebraska are government-owned. See Neb. Rev. Stat. §§ 70-681, 70-1001 to 70-1027, 70-1401 to 70-1423; Sioux City Foundry v. Southern Sioux City, 968 F.2d 777, 781 (8th Cir. 1992) (Nebraska is a public power state).

  • 41 {41} See appx. A.1, infra (summary of the billing, credit, and termination regulations of a number of states).

  • 42 {42} PUCs are strong players within the state regulatory scene. Their national body, the National Association of Regulatory Commissioners (NARUC), exerts much influence upon the nation’s regulatory policies. See Charles Stalon & Reinier Lock, State-Federal Relation in the Economic Regulation of Energy, 7 Yale J. on Reg. 427, 440 (1990).

  • 43 {43} Proceedings before regulatory agencies may be subject to general provisions of the federal administrative procedure acts, 5 U.S.C. §§ 551–559, or comparable state administrative procedure acts, for example, Mass. Gen. Laws ch. 30A, as well as to federal and state laws governing the particular type of utility proceeding, for example, 16 U.S.C. § 825g (hearings before the Federal Energy Regulatory Commission) and Mass. Gen. Laws ch. 164, § 94G (fuel charge clause hearings). See Charles F. Phillips, The Regulation of Public Utilities: Theory and Practice 152–3 (1993).