The Effectiveness of the Federal Power Commission

This paper takes the view that the Federal Power Commission dispenses services that have measurable economic benefits and imposes the costs of these services on both the regulated firms and the final consumers of gas and electricity. An attempt is made to define and measure benefits from regulation at the margin, where this margin has been chosen by the Commission via present rulemaking and surveillance activities. The costs of regulatory proceedings are estimated to include expenditures of the Federal Power Commission and other participants in the Commission's proceedings, and to include implied losses of final consumers consequent from regulatory delay. Benefits are compared to costs for each of the Commission's areas of responsibility, and the comparisons pose the question whether there ought to be more or less regulatory activity. The estimates here imply that the FPC is operating at a greater scale than net benefits warrant, particularly as a consequence of its ventures toward regulating natural gas production in the last decade.