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Supreme Court Retains Demand Response Mandate

February 11, 2016

On Monday, January 25, the Supreme Court reaffirmed a mandate created in 2011 by the Federal Energy Regulatory Commission (FERC) that requires utilities to pay energy consumers for reducing their electricity usage during peak demand. Electricity generators and utilities challenged the rule, asserting that FERC was overstepping its boundaries, but Justice Elena Kagan confirmed the rule’s lawfulness in a statement of the court’s opinion. The court voted 6-2 in favor of the directive. (Justice Samuel Alito was recused in the case.) The overwhelming victory for the rule comes as a minor shock. When the Court heard oral arguments in October, conservative justices were a bit suspicious of FERC’s conduct. On Monday, January 25, however, Chief Justice John Roberts and Justice Anthony Kennedy sided with the four liberal judges of the court, giving the mandate a decisive victory. (Justices Antonin Scalia and Clarence Thomas dissented.)


FERC argued that the demand response rule improves the fairness of electricity markets, reduces the frequency of blackouts, and produces substantial consumer benefits by reducing the cost of electricity during peak hours. Demand response both helps to integrate wind and solar into the electric power grid and reduces pollution, so the ruling is a win for proponents of the environment and climate. The White House is one such proponent, and issued a statement in praise of the rule. Energy consulting firms that help consumers take advantage of energy efficiency programs also benefit from the vote.


It is important to research demand response programs and find the best program given your particular usage reduction abilities. Demand response helps lower their electricity usage when electric wholesale prices in the market are highest, and your expenses can be reduced significantly. When anyone can benefit from demand response, EarlyBird Power has found the best opportunity for clients by working with multiple demand response suppliers to ensure the highest paybacks.


Brought to you by your EarlyBird Power Market Research Team