OREANDA-NEWS. The operator of New England's electric grid expects to delay fully integrating demand response into its power markets by a year because of continuing legal uncertainty in the US Supreme Court about the role of that resource.

The Independent System Operator of New England recommended the delay last week in a "contingency plan" that details how it could act depending on what happens at the Supreme Court and the Federal Energy Regulatory Commission (FERC). The delay would stop demand response, which already participates in capacity markets, from offering into the grid's energy and reserves markets until June 2018.

The Supreme Court could decide as early as this month if it will review an appeals court ruling that paying demand response resources for reducing energy demand was a type of a retail sale that could not be regulated by federal law. FERC has appealed that ruling to the high court over concerns that it would block demand response from having any role in regional wholesale power markets it regulates.

But even if the court takes up the case and throws out the ruling blocking demand response, the case is unlikely to be decided until about June 2016. The grid operator said the "most prudent course of action" would be to delay the integration until June 2018 because it expects it would take two years to fully integrate demand response into its energy and reserves markets.

New England's grid operator included other possibilities in its contingency plans for demand response. If the Supreme Court declines to take up the appeal or upholds the decision, FERC will soon have to interpret how to apply the appeals court ruling to the wholesale energy markets it regulates.

If FERC adopts a narrow interpretation and finds the ruling only applies to energy markets, the grid operator said demand response could still provide capacity services but would not receive an energy payment when dispatched. Demand response in this case would be deployed during scarcity conditions, though the grid operator noted it would have to change energy pricing rules and develop new non-performance penalties.

But FERC could also take a broader interpretation of the ruling and find all demand resources are ineligible to offer into the grid's annual capacity auction as supply resources. If this happens, the grid operator said it could let demand response reduce the amount of capacity it procures each year.

Another option, which is being considered by the PJM Interconnection, is to allow load-serving entities that control demand response to procure less capacity.

The New England grid operator plans to discuss the options at the 5-6 May meeting of its markets committee.