1 Policy and law
What is the government policy and legislative framework for the electricity sector?
No single government body sets government policy for the electricity sector. The federal government, which regulates wholesale markets, follows a generally pro-competitive policy. The competition reforms that transformed the US electricity sector represent the latest chapter in three decades of restructuring, deregulation, and regulatory reforms that affected utility sectors of the economy historically subject to price regulation. Retail sales are regulated by the states. Several states have adopted choice programmes intended to introduce competition among retail suppliers of electricity. While some states have delayed or suspended retail choice plans amid concerns that deregulation may not benefit end-use consumers, retail choice is thriving in other states, such as New York and Texas.
The Energy Policy Act of 2005 (EPAct 2005) represents the most significant change in US energy policy since the Federal Power Act of 1935 (FPA) and the Natural Gas Act of 1938 (NGA). EPAct 2005 granted the Federal Energy Regulatory Commission (FERC) the authority to issue rules to:
• prevent market manipulation in wholesale power and gas markets, and in electric transmission and gas transportation services;
• assess civil penalties for violations of the FPA and other energy statutes;
• oversee mandatory reliability standards governing the nation’s electricity grid; and
• approve the siting of transmission facilities, traditionally a matter of state or local jurisdiction, under certain circumstances.
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