Dive Brief:

• New Mexico Sen. Martin Heinrich (D) has introduced legislation that would grant the Federal Energy Regulatory Commission the authority to regulate demand response in wholesale markets across the nation, according to Albuquerque Business First. 
• The bill would require regional grid operators in interstate wholesale markets to compensate for demand response, providing incentives for consumers to reduce their power use. FERC had asserted that authority in 2011 with Order 745.
• In May of this year, the U.S. Court of Appeals for the District of Columbia Circuit vacated FERC's order, ruling it only had authority to regulate demand response in capacity markets. Heinrich's bill would address that ruling by asserting FERC's jurisdiction to regulate in wholesale markets. The proposal comes as FERC is considering whether to appeal the appeals court's decision to the U.S. Supreme Court.

Dive Insight:

Sen. Martin Heinrich (D-NM) has proposed a legislative fix to FERC's demand response woes, introducing a bill which "clarifies" that FERC has the legal authority to require regional grid operators in interstate wholesale markets to compensate for demand response.

"Modernizing our electrical grid is central to becoming a nation that's more energy efficient and provides cost savings for everyone," said Heinrich. "There is no kilowatt-hour more valuable than the one you don't use in the first place. This bill is a small fix but with big implications for growing the economy, and is central to slowing the effects of climate change and creating a healthier environment for future generations."

Last month, the D.C. Circuit Court issued a stay on its earlier decision to vacate Order 745 while FERC decides whether or not to appeal to the Supreme Court. That stay expires in less than a month but would extend in the event of an appeal.

Heinrich said that while the Federal Power Act gives FERC authority to regulate power markets, the law was written before regional power grids and at a time when there were few interstate sales of electricity.

"Though the law gave FERC clear authority over matters affecting wholesale power rates, there is some question whether Congress intended a reduction in power use to be considered on equal footing with the generation of power, even though both clearly affect the rates consumers pay for power," Heinrich said in a statement.