The Federal Energy Regulatory Commission was created in 1977 following the Department of Energy Organization Act. This agency emerged from a reorganization triggered by the 1973 oil crisis which exposed vulnerabilities in the fragmented regulatory system.
The Federal Energy Regulatory Commission is self-funding through annual charges levied on natural gas, oil, and electric industries it regulates. Congress sets its budget through annual appropriations while the agency raises revenue to reimburse the Treasury for these operational costs.
The President appoints up to five commissioners of the Federal Energy Regulatory Commission who are confirmed by the Senate. These commissioners serve staggered five-year terms with no more than three members belonging to the same political party at any given time.
In 1996 the Federal Energy Regulatory Commission issued Order No. 888 which spurred the creation of regional transmission organizations across the United States. The agency later issued Order No. 841 in February 2018 requiring wholesale markets to open to individual storage installations and Order No. 2222 on the 17th of September 2020 enabling distributed energy resources to participate in regional wholesale electricity markets.
The Federal Energy Regulatory Commission collected more than $6.3 billion from California electric market participants through settlements following investigations into alleged manipulation during the California electricity crisis. Since passage of the Energy Policy Act of 2005 the agency has imposed over $1 billion in civil penalties and disgorgement of unjust profits for violations of anti-market manipulation rules.