SCOTUS Moves the Planet Forward Promoting 'Demand Response'

The Supreme Court has handed down a major win for the planet in the climate change fight, which undoubtedly will help move the planet forward.

On Jan. 25, the court upheld the Federal Energy Regulatory Commission’s (FERC) "demand response" rule, which was created in 2011 and orders utilities to compensate consumers for reducing their use during peak hours. These times of day, usually in the morning or evening, are when most people are home and using their electricity.

FERC is the federal agency responsible for keeping our electricity rates “just and reasonable,” which is why it issued the demand response rule to give it access and equal footing in wholesale energy markets, where electricity is bought and sold. It levels the playing field between demand response and traditional sources of electricity, letting the resource compete alongside others.

In the court’s opinion, Justice Elena Kagan explained that demand response “arose because wholesale market operators can sometimes — say, on a muggy August day — offer electricity both more cheaply and more reliably by paying users to dial down their consumption than by paying power plants to ramp up their production.”

Demand response reduces energy demand when power is needed most, rather than increasing supply from expensive, carbon-emitting fuels. It leverages people and technology to cost-effectively meet energy demands, rather than building or turning on more power plants. These are crowd-sourced energy reductions that reduce costs for everyone by taking the place of very expensive generation.

Demand response saved customers $11.8 billion in the mid-Atlantic region of the United States in 2013 alone. It also helped avoid blackouts during the polar vortex in 2014. And, just as important, it gives customers the choice and opportunity to save money by taking part in demand response programs.

“It’s a significant victory for anyone in favor of a cleaner, cheaper, accessible, and more reliable grid,” Michael Panfil, an attorney for the Environmental Defense Fund Clean Energy Program, wrote in a blog post discussing the SCOTUS ruling. “That describes a diverse group — consumer advocates, environmentalists, economists, states, grid operators, and leading legal scholars all filed in support of a critically important and well-designed policy creating access for demand response in wholesale energy markets.”

Not everyone is as enthusiastic about the demand response rule — namely some electricity producers and grid operators, which challenged the rule in court. While they claimed FERC overstepped its authority, SCOTUS disagreed — ruling 6-2 against the challenge. FERC’s authority does extend to wholesale power markets, and the court ruled that, in this case, FERC was simply exercising that authority.

But the ruling is good news for anyone who cares about climate change and cheaper electricity.

“FERC’s demand response programs make energy cheaper, ensure the reliability of the grid, and protect our air and water from fossil fuel pollution," Casey Roberts, staff attorney at Sierra Club, said in a statement.

“Today’s decision will go a long way toward protecting public health and building on the massive strides we have made toward transitioning to a clean energy economy.”

 

(Image Credit: Wikimedia)

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