FERC, Grid Operator, Others File Supreme Court Briefs in Demand Response Case

Source: iStock

The Federal Energy Regulatory Commission (FERC), a grid operator, states, and other parties just filed briefs with the U.S. Supreme Court in a case that could decide whether Americans have access to low-cost, clean and reliable electricity.

The case, EPSA v. FERC, revolves around demand response, a resource that helps keep prices low and the lights on – and does so while also being environmentally friendly.

In 2013, for example, demand response saved customers in the mid-Atlantic region close to $12 billion. And during the polar vortex, which threatened the North-East with freezing cold in 2014, the same resource helped prevent black-outs.

The clean energy rule at issue in this case is called FERC Order 745. EDF has been writing about this demand response case throughout the past year. We’ve been fighting for low-cost demand response and we’ll keep fighting in the Supreme Court. 

History of the Case

The case involves a FERC rule that allows demand response – a low-cost, clean, and reliable energy conservation resource – the chance to compete fairly in our nation’s wholesale energy market.

EDF and a broad coalition of consumer advocates, environmental groups, companies, and industry organizations support it.

Demand Response – How It Works, Why It’s Popular

The broad support for demand response exists because of how the resource works.

Demand response reduces energy demand when power is needed most, rather than increasing supply from costly, carbon–emitting fuels. It relies on people and technology, not power plants, to affordably meet our country’s rising electricity needs. In so doing, it reduces costs for everyone by taking the place of very expensive generation.

Anyone in favor of cleaner, more reliable, lower-cost energy has a reason to support demand response.

What’s at Issue

FERC is the federal agency responsible for keeping our electricity rates “just and reasonable” (in other words, for making sure we get fairly priced electricity).

FERC created Order 745 to further that goal. Order 745 allows demand response access to the wholesale energy market, where electricity is bought and sold. It levels the playing field between demand response and traditional sources of electricity generation, like coal.

In doing so, demand response has been able to reduce our use of unneeded, costly electricity – the exact type of electricity that should be limited if one wants “just and reasonable” rates.

Electricity producers challenged FERC’s Order 745, arguing that the agency lacked jurisdiction to create it. A three-judge panel for the U.S. Court of Appeals for the D.C. Circuit Court, in a split 2-to-1 decision, ruled in favor of the challengers.

Now FERC — as well as states, demand response providers, grid operators, and others – have stated their case to the Supreme Court.

The Case Before the Court

In its just-filed brief, the Solicitor General said on behalf of FERC:

Given that demand-response programs unquestionably confer significant benefits on wholesale markets, including lower rates, there is no defensible justification for concluding that the [Federal Power Act] nevertheless altogether excludes the programs from wholesale markets or FERC regulation. (FERC brief page 34)

The FERC brief also says:

By exercising authority over wholesale demand-response programs, FERC can ensure that a practice that occurs in wholesale markets, and has been widely recognized as tremendously important to the efficient functioning of those markets, will continue to provide benefits to consumers and the economy and is deployed in a way that results in just and reasonable wholesale rates and a reliable electricity system. (FERC brief page 45)

Another party to the case, demand response company EnerNOC, said in its brief:

Without demand response participation, wholesale energy markets will not ‘function…effectively’: Competition will be constrained; and prices will be higher. (EnerNOC brief page 39)

What Happens Next

Next, attention will turn to the amicus briefs – briefs filed in support of the parties to the case. Those, including EDF’s amicus brief, will be filed by July 16.

The Supreme Court is expected to hear oral arguments in the case this fall.

You can find all the briefs in the case here. And EDF will keep you updated as the case moves forward.

This post originally appeared on EDF's Climate 411 blog.

Photo source: iStock

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