Press Release Summary:
NEMA welcomes U.S. Supreme Court determination that the Federal Energy Regulatory Commission has the authority to regulate demand response—paying consumers to use less electricity during times of peak demand—in wholesale electricity markets. According to decision, FERC has the authority to regulate demand response at the wholesale level under Section 824 of the Federal Power Act. States have the authority to regulate electricity at the retail level.
Original Press Release:
Electrical Manufacturers Welcome Supreme Court Decision to Uphold FERC Role in Demand Response
ARLINGTON, VA — The National Electrical Manufacturers Association (NEMA) welcomes the U.S. Supreme Court determination that the Federal Energy Regulatory Commission (FERC) has the authority to regulate demand response—paying consumers to use less electricity during times of peak demand—in wholesale electricity markets. Justice Elena Kagan authored the majority opinion, and was joined by five other members of the Court overturning a decision of the U.S. Court of Appeals for the District of Columbia Circuit that held FERC had infringed on the authority of states to regulate retail electricity rates. Justices Scalia and Thomas dissented.
According to the decision, FERC has the authority to regulate demand response at the wholesale level under Section 824 of the Federal Power Act. States have the authority to regulate electricity at the retail level. The Supreme Court noted that wholesale and retail markets are inextricably linked, and even though FERC actions at the wholesale level may impact a retail market, that incidental impact does not prohibit FERC from taking actions that are solely aimed at wholesale markets. The decision noted that, “…transactions that occur on the wholesale market have natural consequences at the retail level. And so too, of necessity, will FERC’s regulation of those wholesale matters.”
In response, NEMA President and CEO Kevin J. Cosgriff said, “NEMA has long believed that both FERC and the states have a responsible role in promoting demand response as part of the effort to ensure electricity supply and demand are balanced when necessary. The Supreme Court’s decision recognizes that and ensures that wholesale demand response will continue to help the bulk power system operate more efficiently and at lower cost. The regulatory certainty provided by the decision will encourage increased deployment of demand response-enabling technologies that can reduce electricity demand during peak hours. This should result in reduced wholesale electricity prices during periods of peak demand, reduced strain on the electric grid, and potentially reduced instances of brownouts and blackouts.
“In addition, since the Supreme Court decided that the level at which FERC determined that demand response should be compensated was not ‘arbitrary and capricious,’ as some opponents had argued, this should allow us to move beyond the issue.”
The Supreme Court’s full decision is available online: http://www.supremecourt.gov/opinions/15pdf/14-840_k537.pdf
NEMA’s July 2014 statement in support of FERC’s role in demand response is available at: http://www.nema.org/news/Pages/NEMA-Supports-FERCs-Request-to-Seek-Rehearing-of-D-C-Circuits-Demand-Response-Decision.aspx
The National Electrical Manufacturers Association (NEMA) represents nearly 400 electrical, medical imaging, and radiation therapy manufacturers at the forefront of electrical safety, reliability, resilience, efficiency, and energy security. Our combined industries account for more than 400,000 American jobs and more than 7,000 facilities across the U.S. Domestic production exceeds $117 billion per year.
National Electrical Manufacturers Association
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