EPSA files brief with Supreme Court on FERC demand response case

The Electric Power Supply Association (EPSA) and a number of other parties filed a legal brief with the U.S. Supreme Court Aug. 31 in the Federal Energy Regulatory Commission (FERC) demand response case that the high court will consider in October.

EPSA and certain other industry groups are trying to preserve the legal victory they gained in May of 2014 when the  U.S. Court of Appeals for the District of Columbia Circuit overturned the FERC rule on demand response in its entirely.

The overturned rule seeks to encourage retail customers to reduce electricity consumption when economically efficient. The D.C. Circuit found that FERC was encroaching on the states’ exclusive jurisdiction to regulate the retail market.

But FERC sought review from the Supreme Court, and in May the high court agreed to hear the case. Oral argument is set for Oct. 14

The merits brief was filed Aug. 31 by EPSA along with the American Public Power Association (APPA), the National Rural Electric Cooperative Association (NRECA), the Edison Electric Institute (EEI), the Old Dominion Electric Cooperative (ODEC), the PJM Power Providers Group (P3), Talen Energy Marketing and PPL Corp. (NYSE:PPL).

The filing was made in the Supreme Court cases on FERC Order No. 745 as to Demand Response compensation in wholesale electric energy markets.

 The Supreme Court granted review as to two questions – one as to whether FERC has jurisdiction under the Federal Power Act and the other as to whether the full (locational marginal price) LMP compensation formula is arbitrary and capricious.

The remaining briefing deadline is for amicus briefs in support of respondents which are due Sept. 8 given the Labor Day holiday.

The PJM Interconnection filed its brief in July arguing that the D.C. Circuit should be reversed because “there is nothing in the text of the Federal Power Act (FPA) that forecloses FERC’s conclusion that it can regulate system operators’ payments to demand response.”

EPSA, on the other hand, argues in its brief that the FPA “forecloses” FERC’s attempt to regulate demand response. EPSA also claims that the demand response, or DR, rule is a “transparent attempt” by FERC to regulate retail sales.

Also “FERC cannot justify its jurisdictional grab through the circular argument that it may regulate anything that it invites into the wholesale markets,” EPSA argues in the 76-page brief.

EPSA, and the parties signing onto the brief, also argue that FERC’s rate for compensating demand response is “arbitrary and capricious” and “divorced from its professed policy goal.”

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.