Key Issues > Federal Oversight of Electricity Markets and Infrastructure
energy icon, source: Art Explosion

Federal Oversight of Electricity Markets and Infrastructure

Electricity is essential to modern life—providing many services to households and a key resource to U.S. businesses. Production of electricity can lead to environmental concerns including air and water pollution, greenhouse gas emissions, and waste associated with the burning of coal or from spent nuclear fuel. The national electricity system, which was built up over decades, faces a number of challenges, including reliability and security concerns.

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Much of the nation’s electricity is produced by private companies at privately-owned power plants, and is sold to consumers in retail markets that are regulated by state and/or local governments. However, the federal government has several important roles in the electricity industry—as a regulator, as a driver of electricity policy, overseeing electricity’s environmental impacts, and as an owner of electricity infrastructure.

Regulator

The Federal Energy Regulatory Commission (FERC) serves as the principal federal regulator of electricity markets and transmission. In recent years, FERC has taken steps to increase the role of markets by, among other things:

  • Encouraging the development of independent transmission operators such as Regional Transmission Organizations (RTO). (Figure 1 shows the RTOs operating in the United States.)
  • Approving plans for the creation of independently operated, centralized markets
  • Taking steps to monitor the competiveness of those markets

Figure 1: U.S. Regional Transmission Organizations

U.S. Regional Transmission Organizations

Electricity Policy

Concerns over the long-term availability and price of domestic and international fuel sources, and broader national policy issues such as climate change, have increased the national focus on aspects of electricity policy. The proportion of electricity generated using various fuel sources has been a consistent area of interest to stakeholders involved in questions of national electricity policy. (Figure 2 provides a forecast of how electricity production is expected to change in the future)

Figure 2: EIA Forecast of Electricity Generation, by Fuel Source

EIA Forecast of Electricity Generation, by Fuel Source

Key policy issues pursued in recent years:

  • Development of proposed national policies to address climate change, which could affect how electricity is produced and its price.
  • Incentives for different fuel sources for electricity.
  • Efforts to promote renewable energy and consideration of how to operate transmission grids in order to accommodate the increased use of renewable.
  • Impacts of changing fuel prices and regulatory changes on electricity supplies.
  • Increased emphasis on real-time pricing of electricity and other forms of demand response—a way to potentially reduce electricity demand by paying consumers to reduce their usage.

Electricity’s Impact on the Environment

Production of electricity can have important impacts on the environment. Producing electricity from fossil fuels can result in air pollution, water impacts, solid waste, and emissions of greenhouse gasses. Some of these impacts are subject to federal regulation and some have been the subject of legislative review. Producing electricity using nuclear power results in radioactive waste that must be stored, but the federal government has not yet completed a waste storage facility and it has been sued by utilities seeking to recover claimed damages resulting from the delay. Efforts to develop a waste repository at Yucca Mountain, in Nevada, have been the subject of ongoing debate. Key areas of GAO examination include:

  • Regulations to address environmental impacts from electricity generation
  • Efforts to reduce the emission of greenhouse gases from fossil-fueled power plants
  • Efforts of the Department of Energy and others to develop a waste repository at Yucca Mountain
  • The use of water at electricity plants

Owner of Electricity Infrastructure

The federal government is the largest owner of electricity generating capacity and owns significant transmission assets in the United States. Development of these resources was initially pursued as part of efforts to provide electricity to rural areas and as part of flood control and irrigation efforts. These electricity assets are managed by the following federal entities:

  • Tennessee Valley Authority (TVA) (Figure 3 shows TVA’s service area and key generating facilities.
  • Bonneville Power Administration (BPA)
  • Western Area Power Administration (WAPA)
  • Southeastern Power Administration (SEPA)
  • Southwestern Power Administration (SWPA)

GAO has examined the operation of these entities, their performance, and other issues.)

Figure 3: TVA Service Area and Key Electricity Generating Facilities

TVA Service Area and Key Electricity Generating Facilities

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.

EPA Regulations and Electricity:

Better Monitoring by Agencies Could Strengthen Efforts to Address Potential Challenges
GAO-12-635:
Published: Jul 17, 2012. Publicly Released: Aug 16, 2012.

Tennessee Valley Authority:

Full Consideration of Energy Efficiency and Better Capital Expenditures Planning Are Needed
GAO-12-107:
Published: Oct 31, 2011. Publicly Released: Dec 1, 2011.

Electricity Grid Modernization:

Progress Being Made on Cybersecurity Guidelines, but Key Challenges Remain to be Addressed
GAO-11-117:
Published: Jan 12, 2011. Publicly Released: Jan 12, 2011.

Electricity Restructuring:

FERC Could Take Additional Steps to Analyze Regional Transmission Organizations' Benefits and Performance
GAO-08-987:
Published: Sep 22, 2008. Publicly Released: Sep 26, 2008.

Electricity Markets:

Consumers Could Benefit from Demand Programs, but Challenges Remain
GAO-04-844:
Published: Aug 13, 2004. Publicly Released: Sep 13, 2004.

More Reports

Electricity Markets:

Actions Needed to Expand GSA and DOD Participation in Demand-Response Activities
GAO-14-594:
Published: Jul 11, 2014. Publicly Released: Aug 11, 2014.

Advanced Reactor Research:

DOE Supports Multiple Technologies, but Actions Needed to Ensure a Prototype Is Built
GAO-14-545:
Published: Jun 23, 2014. Publicly Released: Jun 23, 2014.

Electricity Markets:

Demand-Response Activities Have Increased, but FERC Could Improve Data Collection and Reporting Efforts
GAO-14-73:
Published: Mar 27, 2014. Publicly Released: Apr 28, 2014.

Climate Change:

Energy Infrastructure Risks and Adaptation Efforts
GAO-14-74:
Published: Jan 31, 2014. Publicly Released: Mar 4, 2014.

Managing Critical Isotopes:

Stewardship of Lithium-7 Is Needed to Ensure a Stable Supply
GAO-13-716:
Published: Sep 19, 2013. Publicly Released: Oct 17, 2013.

Oil and Gas Development:

BLM Needs Better Data to Track Permit Processing Times and Prioritize Inspections
GAO-13-572:
Published: Aug 23, 2013. Publicly Released: Sep 23, 2013.

Patient Protection and Affordable Care Act:

Employment and Training:

Labor's Green Jobs Efforts Highlight Challenges of Targeted Training Programs for Emerging Industries
GAO-13-555:
Published: Jun 19, 2013. Publicly Released: Jul 19, 2013.

Energy:

Federal Support for Renewable and Advanced Energy Technologies
GAO-13-514T:
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Department of Energy:

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