ENERGY WEEK AHEAD: FERC DEMANDS ITS DAY BEFORE THE SUPREME COURT
FERC may be Washington’s sleepiest agency, but a Supreme Court case this week couldn’t have higher stakes for power producers, utilities and, some say, states’ rights.
In oral arguments on Oct. 14, justices will examine whether the Federal Energy Regulatory Commission has the ability to set rates for demand response programs, in which large customers agree to cut electricity use during peak hours.
Companies such as EnerNoc Inc., which runs such programs, say that without a federal policy the entire model of shedding peak load could be lost and consumers would lose billions of dollars. But opponents such as NRG Energy Inc. and Dynegy Inc., which earn a premium on the electricity they sell when demand is high, have joined together to question both whether FERC has this legal authority and the rates it has set.
“If they can regulate this they can regulate rooftop solar,” said William Scherman, a partner at Gibson Dunn and former general counsel at FERC, who isn’t involved in the case. “What is the limiting principle as to where their jurisdiction ends?”
But “if each state did it on their own, it would be too small, you wouldn’t have a market,” said Malcolm Woolf, senior vice president at Advanced Energy Economy, which represents EnerNoc and other companies that cut electricity use. “Electricity and utilities don’t respect state boundaries.”
Cutting peak demand is also crucial to reducing the use of fossil fuels and addressing climate change, environmental advocates say.
The high court case centers on FERC Order 745. It set out the terms under which companies could bid in their pledge not to use electricity in wholesale electricity markets. The government argues this was needed to “ensure just, reasonable and non-discriminatory wholesale rates.”
