Supreme Court upholds FERC demand response rule

The U.S. Supreme Court ruled 6-2 in favor of FERC’s Order 745, which paves the way for demand response to be traded in wholesale electricity markets – providing a boost to the demand response industry and a setback for large power generators.

The justices determined that FERC acted within its authority granted by the Federal Power Act in making the order, which is a framework providing a set valuation for demand response.

The case, titled FERC vs. Electric Power Supply Association, had to do with the order and whether the commission was allowed to establish rules for the demand response market. A lower appeals court had vacated FERC’s rule as having overstepped the commission’s authority.

Demand response markets work by grid operators providing financial incentives for customers to use less electricity during high peak times, such as summertime months. Demand response, as a technology, can help make it so fewer power plants have to be built.

Those speaking in favor of the FERC order were demand response firms such as Comverge and EnerNOC, as well as large, energy-hungry industrial concerns such as Alcoa.

Owners and operators of power plant fleets, such as Exelon, Dynegy, FirstEnergy, American Electric Power and others, supported vacating the rule to help bolster profits.

According to reports, Justice Elena Kagan wrote the majority opinion while Clarence Thomas and Antonin Scalia dissented and Samuel Alito recused himself due to a stock holding.

Environmental groups were also pleased with the high court’s ruling supporting demand response.

Allison Clements, Director of the Sustainable FERC Coalition housed at the Natural Resources Defense Council said demand response is a win for customers and the planet.

“The Supreme Court’s decision is great news for consumers and the environment. It gives consumers more opportunity to save, and even make, money through smarter electricity use. Also, because demand response is flexible and fast-acting, it enables the affordable integration of more wind and solar power into the electricity transmission grid,” Clements said in a release.

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