Hydroelectric power regulation was the first work undertaken by the Federal Power Commission, the Commission's predecessor, after Congress passed the Federal Water Power Act of 1920.

Subsequent statutes under which the Commission regulates non-federal hydroelectric power projects that affect navigable waters, occupy U.S. lands, use water or water power at a government dam, or affect the interests of interstate commerce include the FPA (Federal Power Act), the PURPA (Public Utility Regulatory Policies Act), the Electric Consumers Protection Act of 1986, and the EPAct (Energy Policy Act of 1992).

This work includes: Issuing preliminary permits, project licenses and exemptions from licensing; ensuring dam safety; performing project compliance activities; investigating and assessing payments for headwater benefits; and coordinating with other agencies.

Licenses are issued for a term of between 30 to 50 years, and exemptions are granted in perpetuity. Commission costs are offset by annual charges collected from license and exemption holders. The Commission also determines charges for a licensee's use of federal lands, federal dams, and Native American reservations.

Licensed projects receive comprehensive safety inspections from Commission engineers stationed in Washington and at five regional offices. The Commission is responsible for dam safety at over 2,600 licensed and exempted dams and related water retention structures. The dam safety program is a key Commission priority.