U.S. Supreme Court grants petition for review of FERC v. EPSA

The U.S. Supreme Court on May 4 granted a petition for a writ of certiorari filed on Jan. 15 by U.S. Department of Justice Solicitor General Donald Verrilli, on behalf of FERC, for review of the judgment of the U.S. Court of Appeals for the District of Columbia in FERC v. Electric Power Supply Association (EPSA).

As TransmissionHub reported, the petition asked the Supreme Court to consider whether FERC reasonably concluded that it has authority under the Federal Power Act (FPA) to regulate the rules used by operators of wholesale electricity markets to pay for reductions in electricity consumption, known as demand response, and to recoup those payments through adjustments to wholesale rates.

Based on its interpretation of FPA Sections 824(d) and 824(e), FERC in 2011 issued Order 745 to eliminate barriers to the use of demand response commitments in wholesale markets. The Court of Appeals on May 23, 2014, vacated Order 745 in FERC v. EPSA, finding that FERC’s interpretation of Sections 824(d) and 824(e) was overreaching and that states have exclusive authority to regulate the retail market.

In the arguments for granting the petition, Verrilli claimed that the Court of Appeals “seriously misinterpreted” the FPA, and that the Court of Appeals’ analysis was driven by a concern that FERC’s position would permit FERC to regulate the retail electricity market and other markets for generation in-puts, such as fuel and steel.

According to the Supreme Court’s website, the cases are consolidated and a total of one hour is allotted for oral argument.

The cases are granted limited to the following questions:

* Whether FERC reasonably concluded that it has authority under the FPA, 16 U. S. C. 791a et seq., to regulate the rules used by operators of wholesale electricity markets to pay for reductions in electricity consumption and to recoup those payments through adjustments to wholesale rates.

* Whether the Court of Appeals erred in holding that the rule issued by FERC is arbitrary and capricious.

The court noted that Justice Samuel Alito took no part in the consideration or decision of the petition.

In a statement provided to TransmissionHub on May 4, FERC Chairman Norman Bay said: “I am pleased with this morning’s decision by the Supreme Court to grant the petition for writ of certiorari in the Order No. 745 proceeding. The integration of demand response is important to the nation’s competitive wholesale electricity markets and reliable electric service.”

In a May 4 statement provided to TransmissionHub, John Shelk, president and CEO of EPSA, said, “EPSA and its partners in the unprecedented coalition that successfully challenged FERC Order 745’s demand response provisions look forward to defending the D.C. Circuit’s well-reasoned decision in the Supreme Court.”

In a May 4 blog post, Allison Clements, director of the Sustainable FERC Project housed within the Natural Resources Defense Council (NRDC), wrote, in part: “By concluding that demand response resources fall strictly within the domain of state authority, the lower court decision unnecessarily upended a workable division of state-federal authority over demand response and other customer-powered resources that are critical to a reliable, affordable and clean electric grid. The reality is demand response resources are integral components of, and have significant implications for, our backbone transmission grid over which FERC has responsibility.”

According to Clements, briefing for the Supreme Court argument will take place this summer, and the one-hour argument is likely to be heard this fall. Until the Supreme Court rules on the argument, Order 745 will remain in effect, she noted.

About Corina Rivera-Linares 3286 Articles
Corina Rivera-Linares was TransmissionHub’s chief editor until August 2021, as well as part of the team that established TransmissionHub in 2011. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial from 2005 to 2011. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines.