US Federal Energy Regulatory Commission Rejects Energy Efficiency Restrictions
The US Federal Energy Regulatory Commission has this week rejected a proposal filed earlier this year by PJM Interconnection seeking permission to restrict energy efficiency resources from entering the wholesale market, a move which has been praised by energy efficiency proponents.
Earlier this year, regional grid operator PJM Interconnection (which is part of the Eastern Interconnection and serves states throughout the east of the country) proposed a rule with the country’s Federal Energy Regulatory Commission (FERC) which would have given states in PJM’s territory the right to exclude or restrict energy efficiency resources from entering the wholesale market in their states.
PJM’s proposal stems from the East Kentucky Power Cooperative’s application to the Kentucky Public Service Commission (PSC) seeking the ability to restrict energy efficiency resources from the wholesale market, itself an effort by Kentucky utilities to reduce their spending on demand-side management programs in the face of declining energy sales.
Unsurprisingly, national business group Advanced Energy Economy (AEE) stood up to protest the proposal and filed a petition of declaratory order with the Federal Energy Regulatory Commission explaining that, “while state commissions have exclusive authority on retail energy decisions, the Federal Power Act gives sole jurisdiction in the wholesale markets to FERC and the associated regional transmission organizations (RTOs).” Specifically, if states and their regulators of the retail market were allowed to restrict energy efficiency resources this would result in “unjust and unreasonable rates” which would be “a direct violation of the Federal Power Act.”