Dive Brief:

• Federal regulators last week directed PJM Interconnection to include “Capacity Performance Resources,” including demand response and energy efficiency, in its upcoming transitional auction next month.
• The grid operator had argued uncertainty stemming from the ongoing legal battle surrounding demand response in wholesale markets meant it should exclude the demand management resources.
• The Supreme Court is reviewing last year's D.C. Circuit Court decision to vacate Order 745, which gave FERC jurisdiction to regulate demand response in wholesale energy markets.

Dive Insight:

A divided FERC ruled last week that PJM must include demand response in its upcoming auction, finding the grid operator's tariff to unfairly discriminated against the resource. The commission said it was "unpersuaded" by PJM’s claims it needed to prohibit demand response resource participation because of legal uncertainty surrounding FERC Order 745. 

"While any litigation of commission orders creates uncertainty, the commission has previously rejected similar arguments as premature, and we disagree that any uncertainty at this point provides a basis for finding that non-generation resources are not similarly-situated to Generation Capacity Resources," FERC wrote.

The decision was not unanimous, however. Commissioner Tony Clark filed a dissent arguing that the commission had previously approved PJM's tariffs and "no new information has subsequently been presented. ... This complaint is clearly a late-filed collateral attack by parties that had more than ample opportunity to raise such concerns in the proper venue."

But the majority noted that PJM has demand response and energy efficiency resources which were selected in prior auctions that "are still expected to deliver on their capacity commitments."

"When PJM filed its contingency proposal to reflect the uncertainty involved in the EPSA decision, it expressly proposed to continue to allow such participation in the event that the Supreme Court accepted certiorari," according to the commission's order. "PJM, therefore, has failed to demonstrate that excluding non-generation resources that are Capacity Performance-capable from these Transition Auctions is just and reasonable and not unduly discriminatory."