Supreme Court Rules on Demand Response

The U.S. Supreme Court today upheld the Federal Energy Regulatory Commission’s jurisdiction over demand response in wholesale electricity markets. The Supreme Court decision reversed the judgment of the U.S. Court of Appeals for the District of Columbia Circuit in a challenge to FERC Order 745.

The Supreme Court majority found that the FERC has jurisdiction over demand response, effectively maintaining how demand response operates currently in the wholesale market.

In response to the court’s ruling, PJM said, “Although PJM will have to study the court’s decision, the ruling supports the continued participation of demand response in competitive wholesale markets. We’re pleased with that outcome. Certainty and continuity are important in markets. Demand response brings value to competitive wholesale markets and is a component of electric system reliability.”

The case originated with the Electric Power Supply Association’s challenge of FERC Order 745 and the FERC’s regulatory authority over compensation for demand response in the wholesale energy market.

In May 2014, the U.S. Court of Appeals for the District of Columbia Circuit overturned the FERC order, which required demand response to be paid the full locational marginal price.