Federal Power Act

Definition

The Federal Power Act is a key piece of legislation enacted in 1935 that established the framework for regulating interstate electricity sales and the development of hydroelectric power projects in the United States. This act created the Federal Energy Regulatory Commission (FERC), which oversees the licensing and operation of hydroelectric dams, ensuring that they are developed and maintained in a way that is environmentally sustainable and economically beneficial.

5 Must Know Facts For Your Next Test

1. The Federal Power Act was part of the New Deal legislation aimed at promoting economic recovery during the Great Depression, focusing on public works and energy development.
2. The act aimed to prevent monopolistic practices in the electricity market by regulating how electricity was produced and sold across state lines.
3. Under the Federal Power Act, FERC has the authority to issue licenses for new hydroelectric projects, ensuring compliance with environmental regulations and local needs.
4. The act emphasizes the need for equitable distribution of electricity, promoting access to power for all regions, especially rural areas that were underserved.
5. Amendments to the Federal Power Act over the years have expanded its scope to include renewable energy sources and address emerging energy market challenges.

Review Questions

• How did the Federal Power Act influence the development and regulation of hydroelectric power projects in the United States?
  • The Federal Power Act significantly shaped the landscape of hydroelectric power development by establishing a regulatory framework overseen by FERC. This agency was tasked with issuing licenses for new hydroelectric projects, which ensured that these developments adhered to environmental standards and considerations. By regulating interstate electricity sales, the act helped create a more competitive market while facilitating the growth of hydroelectric infrastructure across the country.
• Discuss the impact of the Federal Power Act on competition within the electricity market and its implications for consumers.
  • The Federal Power Act was instrumental in fostering competition within the electricity market by curbing monopolistic practices that had been prevalent before its enactment. By regulating how electricity was produced and sold across state lines, the act aimed to prevent any single entity from dominating the market. This competition ultimately led to lower prices and improved services for consumers as multiple providers could enter the market, offering various pricing and service options.
• Evaluate how the amendments to the Federal Power Act reflect changing priorities in energy policy, especially regarding renewable resources.
  • Amendments to the Federal Power Act illustrate a significant shift in energy policy priorities, particularly as concerns over climate change and sustainability have grown. These changes have expanded the act's scope to include regulations supporting renewable energy sources like wind and solar. By adapting to incorporate modern energy challenges, the amended act not only encourages diverse energy production but also ensures that new technologies are integrated into existing frameworks for managing resources efficiently and responsibly.

Related terms

Hydroelectric Power: Electricity generated by using the energy of flowing water, typically through dams that harness river currents to produce power.

FERC: The Federal Energy Regulatory Commission, an agency responsible for regulating the transmission and sale of electricity at wholesale in interstate commerce.

Dams: Structures built across rivers to control water flow, which can create reservoirs for water storage and hydroelectric power generation.