August 19, 2016

Win at the US Supreme Court on Wholesale Compensation for Demand Response Customers

For fifteen years, the Federal Energy Regulatory Commission (FERC) has allowed wholesale energy market operators to compensate retail customers for reducing demand, which reduces wholesale load and the wholesale prices paid to generators. When FERC adopted a rule to increase wholesale compensation to these “demand response” customers, a national coalition of generation facility owners challenged the rule in court. The U.S. Court of Appeals for the District of Columbia Circuit ruled that FERC has no jurisdiction to approve compensation by retail customers for demand reductions. The U.S. Supreme Court overturned this ruling and let the FERC rule stand.

With a strong grasp of the energy market, we were actively involved in the appellate and related proceedings counseling, and aggressively representing PJM Interconnection, L.L.C, (PJM) in efforts to avoid, minimize, and/or mitigate the potentially significant and adverse impacts of the Court of Appeals ruling on their markets. Our appellate advocacy for PJM included preparation of a brief to the D.C. Circuit supporting FERC’s jurisdiction, requesting rehearing en banc from the D.C. Circuit to apprise it of the potentially extensive and adverse impacts on PJM’s wholesale markets, and preparation of a brief to the U.S. Supreme Court seeking reversal of the EPSA decision. Additionally, we requested and obtained a PJM tariff waiver from FERC to limit the market’s dependence on demand response; and developed, filed and litigated at FERC alternative “demand response” tariff rules that would avoid the jurisdictional defect identified by the court.

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