Cite as: 535 U. S. 1 (2002)
Opinion of the Court
sions? Second, must FERC impose that requirement on utilities that continue to offer only "bundled" retail sales?
In Order No. 888, issued in 1996 with the stated purpose of "Promoting Wholesale Competition Through Open Access Non-Discriminatory Transmission Services by Public Utilities," 1 FERC answered yes to the first question and no to the second. It based its answers on provisions of the Federal Power Act (FPA), as added by § 213, 49 Stat. 847, and as amended, 16 U. S. C. § 824 et seq., enacted in 1935. Whether or not the 1935 Congress foresaw the dramatic changes in the power industry that have occurred in recent decades, we are persuaded, as was the Court of Appeals, that FERC properly construed its statutory authority.
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In 1935, when the FPA became law, most electricity was sold by vertically integrated utilities that had constructed their own power plants, transmission lines, and local delivery systems. Although there were some interconnections among utilities, most operated as separate, local monopolies subject to state or local regulation. Their sales were "bundled," meaning that consumers paid a single charge that included both the cost of the electric energy and the cost of its delivery. Competition among utilities was not prevalent.
Prior to 1935, the States possessed broad authority to regulate public utilities, but this power was limited by our cases holding that the negative impact of the Commerce Clause prohibits state regulation that directly burdens interstate commerce.2 When confronted with an attempt by Rhode Is-1 FERC Stats. & Regs., Regs. Preambles, Jan. 1991-June 1996, ¶ 31,036, p. 31,632, 61 Fed. Reg. 21540 (1996). Order No. 888 also deals with the recovery of "stranded costs" by utilities, but this aspect of the order is not before us.
2 For example, in cases involving the interstate transmission of natural gas, we held that a State could regulate direct sales to consumers even when the gas was drawn from interstate mains, Pennsylvania Gas Co. v. Public Serv. Comm'n of N. Y., 252 U. S. 23 (1920); Public Util. Comm'n of
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