Dive Brief:

• The Federal Energy Regulatory Commission (FERC) has asked for an en banc review of the U.S. Court of Appeals District of Columbia Circuit's three-judge panel decision to scrap FERC Order 745, which requires compensation for demand response in wholesale markets.
• The 2-1 decision said FERC's order goes "too far" and violates the states' "exclusive jurisdiction to regulate the retail market."
• FERC Order 745 would have required market operators to pay demand response programs the "locational marginal price" (LMP), which reflects the value of electricity in a specific location at the time it was delivered.

Dive Insight:

The judges' decision said FERC overstepped the bounds of the Federal Power Act. The Act gives FERC jurisdiction over the wholesale and interstate energy markets, but it has no say over retail electricity markets, which are regulated by the states themselves. In this case, opponents of FERC Order 745 said that by requiring certain purchasing constraints for demand response programs, the agency was an indirect regulation of the retail market. FERC, however, said the new rules "directly" affected wholesale markets and had no indirect bearing on the retail market. 

By calling for an "en banc" review, FERC is seeking a different outcome than that given by the three-judge Appeals Court panel, which some industry analysts say could have been flawed.