The Federal Power Commission was established June 23, 1930, under the authority of the Federal Water Power Act, which was passed on March 3, 1921. The commission was terminated on August 4, 1977, and its functions were transferred to the Federal Energy Regulatory Commission under the umbrella of the U.S. Department of Energy.

The most important function of the commission during its 57-year existence was the licensing of water-power projects. It also reviewed plans for water-development programs submitted by major federal construction agencies for conformance with the interests of public good. In addition, the commission retained responsibility for interstate regulation of electric utilities and the siting of hydroelectric power plants as well as their operation. It also set rates and charges for the transportation and sale of natural gas and electricity. The five members of the commission were appointed by the president with approval of the Senate; three of the members were the Secretaries of the Interior, Agriculture, and War (later designated as U.S. Department of the Army). The commission retained its status as an independent regulatory agency for decision making, which is considered necessary for national security purposes.