Supreme Court to Review Demand Response Decision

May 5, 2015 By Karen Henry

supreme court Energy ManageThe US Supreme Court announced it will review a May 2014 decision by the DC Circuit Court of Appeals invalidating the Federal Energy Regulatory Commission’s (FERC) Order 745, Demand Response Compensation in Organized Wholesale Energy Markets.

Demand response is a voluntary energy conservation tool that relies on people and technology to meet the country’s rising electricity needs. During times of high demand, the Natural Resources Defense Council (NRDC) explains in a blog post, residential, commercial and industrial consumers are paid to reduce their electricity use in response to a request from their electric grid. FERC Order 745 gave demand response equal opportunity to compete with traditional energy resources in the wholesale electricity market.

The DC Circuit court of appeals had argued that FERC does not have the authority to govern some customer participation in the wholesale energy markets. The Supreme Court will review FERC’s authority in this matter as well as questions about the fair valuation of demand response.

Review by the Supreme Court opens the door to a possible reversal of the DC Circuit’s decision, but NRDC notes that the review does not guarantee a reversal. It is a good sign, however, that the Supreme Court wants to ensure a workable division of authority between states and the federal government over the US electric grid. The announcement also indicates that the Supreme Court recognizes the importance of demand response for maintaining a clean and reliable electric grid.

A broad coalition of clean energy companies, states and state consumer experts, and environmental organizations, including the Environmental Defense Fund (EDF), supported FERC in requesting the review.

Photo of US Supreme Court via Shutterstock.

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