How are energy rules made?

Follow a rule from a law to a regulator’s rule, a rate case and a permit, and spot who decides, who may speak and when

X4 of Energy Systems, Step by Step: put one finished federal rulemaking (FERC Order No. 2222) in order, step through a Kansas rate case, sort which decisions are federal, state or local, and find where the public can take part.
  • Analyst · L2
  • 12 min
  • After A3

From a law to rates, rules and permits (U.S. federal and Kansas examples)

LawCongress or a state legislature gives a regulator its authority.
  • Market rules and tariffsFERC writes rules for wholesale markets and transmission; an RTO or a utility files its tariff at FERC.
  • Retail ratesThe state commission, in Kansas the KCC, decides each utility's rate case.
  • Project permitsA county, the state or a federal agency, depending on what is built and where.

These approvals follow separate tracks and can overlap: one project may need a tariff change, a rate decision and permits at the same time.

Prairie Town's utility (fictional), in Kansas, wants a wind farm and a new 345 kV line (kV, kilovolts: the line's voltage) about 40 miles long, and to recover their cost in its rates.

One finished federal rulemaking, FERC Order No. 2222: six selected milestones

  1. 19 November 2015: A panel at FERC's open meeting.
  2. 11 April 2016: Data requests and a request for comments (44 comments).
  3. 17 November 2016: A proposed rule (109 comments).
  4. 10 April 2018: A technical conference (52 comments).
  5. 17 September 2020: The final rule, Order No. 2222.
  6. Then: Each RTO files its tariff changes.

A Kansas rate case

Stage Who What happens
Application (Day 0) The utility The utility files an application with supporting data; it needs the commission's approval to change rates.
Staff review KCC staff Staff examine the utility's books and records, ask for more data and recommend; the recommendation is not binding.
Testimony The utility, staff, CURB and other intervenors Expert witnesses file written testimony; the Citizens Utility Ratepayer Board (CURB) speaks for homes and small businesses, and other intervenors may join.
Public hearing Members of the public Not required by law, but generally held in significant cases; public comments become part of the record.
Evidentiary hearing The three commissioners and every party When held, this evidentiary hearing presents the facts formally; commissioners review testimony and exhibits and may question witnesses.
Order (Within 240 days) The three commissioners In most cases the commission issues its decision, a written order, within 240 days of the filing; the limit can be waived in certain circumstances.
The utility, the commission's staff and CURB sign a settlement. Must the commission accept it?

No: the KCC may accept, reject or modify a settlement; the commissioners decide.

Who decides

Decision Level
Rules letting small resources join SPP's wholesale markets as a group Federal
The price per kWh a Prairie Town home pays its investor-owned utility State
A siting permit for the new 345 kV line, about 40 miles long State
Approval of where the wind farm's turbines may stand Local
A check that the tall turbines are safe for aircraft Federal
Mandatory reliability standards for the bulk power grid Federal
A permit to put solar panels on a Prairie Town roof Local
Which can any member of the public do?

Both: KCC comments enter the case record, and FERC took 109 comments on the proposed rule behind Order No. 2222.

With JavaScript on, you put the rule's milestones in order, step through a rate case, sort who decides what and find where the public can speak.

Real institutions, dated sources. FERC's Order No. 2222 (a finished rulemaking, 2015 to 2020) and the Kansas Corporation Commission's own guides; Prairie Town's utility and its project are fictional. Rules differ by state.

Need a refresher? A3 on the market rules FERC oversees; F9 on who decides what in a city.

What you just did, as diagrams

Separate tracks
A law gives a regulator its authority; market rules and tariffs, retail rates and project permits then follow separate tracks, which can overlap.
Who regulates what
FERC regulates interstate transmission and wholesale sales; state commissions such as the KCC approve retail rates.
Dates
One federal rule, Order No. 2222, took 4 years and 9 months from first panel to final rule; a Kansas rate case runs on a 240-day decision clock in most cases.
Voices
Rulemakings take comments; rate cases take testimony from parties and comments from the public; the commissioners decide.
Siting
Where turbines may stand is decided mostly by local governments, sometimes with the state.

Where we stop

This side topic stops at how rules are made

Rules enter the course as who decides what, in what order and when; reading legal texts and following live cases is the work of lawyers and regulatory staff.

This side topic covers

  • Who makes which rule: Congress and FERC, a state legislature and its commission, counties and cities.
  • How a law leads, on separate tracks, to market rules and tariffs, retail rates and permits, and where the public can take part.
  • Reading dates: one finished federal rulemaking and a state commission's rate-case clock.

Left to specialists

  • Legal texts, their interpretation and legal advice.
  • Live proceedings: today's open dockets and pending rules.
  • Other states' and other countries' procedures, which differ.

Read next, three rungs

  1. Start here. Chapter 2 explains who regulates wholesale electricity, who regulates retail rates and how the markets grew. FERC, Energy Primer: A Handbook of Energy Market Basics, January 2024
  2. Go further. A state commission's own guide to a rate case: the revenue requirement, rate design, hearings and settlements. Kansas Corporation Commission, How rates are set, undated, read 7 November 2026
  3. Go deep. Read one finished federal rule in full: its procedural history, the comments and the commission's answers to them. FERC, Order No. 2222 (Docket RM18-9-000), issued 17 September 2020
Go deeper · AnalystHow a rate case builds a rate
  • Step one: how much. The commission sets a revenue requirement: the year's approved expenses, including depreciation (recovering past investment) and income taxes, plus an allowed return.
  • The return. It is earned on the rate base, the net value of what the utility has built, at a rate that blends the cost of its debt and its shareholders' return.
  • Step two: who pays it. Rate design splits that amount among customer classes, such as homes and businesses: fixed charges, prices per kWh and, for large users, demand charges.
  • Where to see it. The KCC describes both steps in its guide; the bills that result are the subject of lesson A4.

Check yourself

Two quick checks.

Myth or fact? “FERC sets the price a Kansas home pays for its electricity.”

  • Myth
  • Fact
Answer

Myth. State regulators approve retail rates, in Kansas the KCC for the utilities it oversees; FERC regulates interstate transmission and wholesale sales.

A Kansas utility files a rate case on 1 March 2026. In most cases, by when must the KCC decide?

  • 30 April 2026
  • 27 October 2026
  • 1 March 2027
Answer

27 October 2026: 240 days after the filing date, the KCC's usual limit for its decision (it can be waived in certain circumstances); any rate change follows the order.

Numbers, sources and what’s next

Numbers to remember

Number What it means Source
240 days How long the KCC has, in most cases, to decide a rate case after the filing date; the limit can be waived in certain circumstances. Kansas Corporation Commission, How rates are set · Undated, read 7 November 2026
4 years 9 months From FERC's first open-meeting panel (19 November 2015) to Order No. 2222 (17 September 2020): 4 years, 9 months and 29 days. FERC, Order No. 2222, Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators, Docket RM18-9-000, final rule, cover page, pp. 10-12 · Issued 17 September 2020, read 7 November 2026
109 Comments FERC received on its proposed rule of 17 November 2016. FERC, Order No. 2222, Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators, Docket RM18-9-000, final rule, p. 11 · Issued 17 September 2020, read 7 November 2026
3 KCC commissioners, appointed by the Governor to overlapping four-year terms; no more than two of one party. Kansas Corporation Commission, The Commission's Role · Undated, read 7 November 2026
230 kV, 5 miles In Kansas, a line this large or larger needs a KCC siting permit: a public hearing within 90 days of the filing and a final order within 180 days. Kansas Statutes, K.S.A. 66-1,177 and K.S.A. 66-1,178, as amended by House Bill 2040 (Kansas Register, 17 April 2025); cited by name, without a link · Read 7 November 2026

Keep going

Back to the course map

Sources and further reading

  • FERC staff, Energy Primer: A Handbook of Energy Market Basics, p. vi and p. 35. Link. January 2024, read 7 November 2026.
    • FERC's authority comes from the Natural Gas Act, the Federal Power Act and the Interstate Commerce Act (p. vi).
    • State regulators approve retail rates, largely cost-of-service, and utilities' investments in generation and distribution (p. 35).
    • FERC certified NERC in 2006, and reliability standards became mandatory and enforceable (p. 35).
  • FERC, Order No. 2222, Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators, Docket RM18-9-000, final rule. Link. Issued 17 September 2020, read 7 November 2026.
    • Effective 60 days after publication in the Federal Register; tariff changes due within 270 days of publication (cover page).
    • The procedural history from which the six milestones are selected, with the comment counts (pp. 10-12).
  • Kansas Corporation Commission, The Commission's Role. Link. Undated, read 7 November 2026.
    • Authority from K.S.A. 74-601 to 74-631; the present commission established by the Legislature in 1933.
    • Three members appointed by the Governor to overlapping four-year terms, no more than two of the same party.
    • The Utilities Division establishes and regulates rates; most electric cooperatives and municipalities are not regulated by the KCC.
  • Kansas Corporation Commission, How rates are set. Link. Undated, read 7 November 2026.
    • Two steps: the revenue requirement (approved expenses, including depreciation and income taxes, plus a return on the rate base), then rate design.
    • The utility files an application; in most cases 240 days from the filing date for the KCC's decision, a written order; the limit is waivable.
    • Staff review and a non-binding recommendation; the Citizens Utility Ratepayer Board (CURB) and other intervenors; expert testimony.
    • A public hearing, generally held in significant cases; an evidentiary hearing; the commission may accept, reject or modify a settlement.
  • Kansas Corporation Commission, Electric FAQs. Link. Undated, read 7 November 2026.
    • Public comments received during the comment period are entered into the official case record; comment online, by mail or by phone, citing the docket number.
  • Kansas Statutes, K.S.A. 66-1,177 and K.S.A. 66-1,178, as amended by House Bill 2040 (Kansas Register, 17 April 2025); cited by name, without a link. Read 7 November 2026.
    • K.S.A. 66-1,177: an electric transmission line is at least 5 miles long and used for the bulk transfer of 230 kV or more.
    • K.S.A. 66-1,178: a KCC siting permit before site preparation or construction; a public hearing within 90 days of the filing, in a county the line crosses.
    • K.S.A. 66-1,178 as amended in 2025: a final order within 180 days of the filing.
  • U.S. Department of Energy, WINDExchange, Land-Based Wind Energy Economic Development Guide, Regulatory Considerations. Link. Undated, read 7 November 2026.
    • The primary siting authority is the local government, or the local government with state regulators; only four states give it to the state alone.
    • Federal Aviation Administration approval may be needed for airspace obstruction.
  • U.S. Department of Energy, 160 Communities Now Automating Solar Permitting with SolarAPP+. Link. 20 December 2023, read 6 November 2026 (lesson F9).
    • Local jurisdictions issue the permits for residential rooftop solar.

Spotted an error, or stuck? Write to hlli@ksu.edu. Corrections are made in place and dated here.

Text licensed CC BY 4.0, code MIT: teachers and students may reuse and adapt it, with credit to Honglin Li.