Supreme Court may decide soon on demand response

OREANDA-NEWS. April 09, 2015. The US Supreme Court could decide by the end of this month if it will hear an appeal from the Obama administration seeking to reverse a ruling that would restrict the role of demand response in regional power markets.

The court today said the nine justices would review the appeal at their 24 April conference, where it takes the vote of at least four justices for an appeal to move forward to oral arguments. The demand response case has been closely watched in the power sector because it could increase capacity prices in organized markets by billions of dollars each year.

Demand response involves paying customers to cut consumption in exchange for a payment, typically the market price of electricity during the period when consumption is reduced. In wholesale power markets demand response resources can be dispatched by grid operators and compete with generating resources.

The Obama administration filed its appeal aiming to reverse an appeals court ruling that would block the Federal Energy Regulatory Commission (FERC) from regulating demand response in the regional power markets it oversees. The ruling, in Electric Power Supply Association v. FERC, found demand response was a form of retail energy sales that only states could regulate.

The Supreme Court will not release the results of the conference until at least 27 April, adding to the uncertainty already surrounding the upcoming auction for forward capacity in the 2018-19 delivery year in the largest US wholesale power market, the PJM Interconnection. It is unknown if about 11GW of demand response will be allowed to offer into the auction because of the ruling. Also unclear is when the auction will start.

PJM yesterday asked to delay the auction, which is scheduled to start on 11 May, by one to three months to give FERC a chance to decide whether to approve a pending market overhaul that it calls capacity performance. The grid operator filed its delay request after the commission failed to decide on the market changes but instead asked for more information.

If the Supreme Court declines to hear the demand response case, the ruling would soon take effect, forcing FERC to act soon on pending complaints that have requested to block demand response from participating in PJM and New England's electric grid.

FERC late last month rejected a request by PJM to put in place a stopgap plan for keeping demand response resources in its capacity market if the Supreme Court reached a decision on the appeal shortly before the start of its capacity auction. The commission at the time said the plan was premature because the court had not yet ruled.