Dive Brief:
- A Federal Energy Regulation Commission (FERC) order to make grid operators provide incentives for customers to engage in demand response has been overturned by the federal court of appeals for District of Columbia Circuit.
- The appeals court ruled 2-1 that FERC had overstepped its bounds by interfering in the retail electricity market, which is left to the states to oversee, not the federal government.
Dive Insight:
Dissenting Senior Judge Harry Edwards pointed out that there is a lot of ambiguity surrounding FERC's ability to oversee demand response in the retail markets. "Focusing on the market in which the consumption would have occurred in the first instance," Edwards wrote, "one can conceive of [the order] as impermissibly falling on the retail side of the jurisdictional line."
However, the rationale behind the court's decision -- that FERC's involvement in the state retail market would set a precedent for the Commission to also intervene in other markets -- prevailed.
The Natural Resources Defense Council (NRDC) says the decision doesn't bode well for demand response, energy efficiency or renewables. "Our higher-level concern is that the grid is evolving pretty quickly with new resources, smart grid technology, on-site power, and we're concerned this decision could really tie FERC's hands in adapting to a new grid," said John Moore, NRDC senior attorney. "It's a pretty strong decision that doesn't give FERC any room to improve the rule."
