On Wednesday, the Supreme Court began hearing oral arguments in a case that promises to have a major impact on future energy costs in the United States.
The Supreme Court is reviewing a 2014 Appellate Court decision that stripped the Federal Regulatory Energy Commission (FERC) of the authority to promote and regulate “demand-response” programs in the energy market.
What exactly is “demand response”?
“Demand Response” (DR) refers to when power grid operators pay customers to shift electricity usage from peak demand times of the day, when electricity demand is highest, power plants work overtime and hourly prices skyrocket. DR programs affect all electricity customers because they reduce stress on the grid, prevent widespread power outages, and cut overall power prices for everyone.
FERC Order 745 required power grid operators to give financial incentives for slashing power use at high-demand times. However, big power generators—who saw a cut in their profit margins under the order— argued that the rule went beyond FERC’s jurisdiction. A U.S. Appellate Court unfortunately agreed, removing FERC’s authority to regulate the important energy efficiency programs.
Consumer advocates and environmental groups, however, weren’t about to call it a day. Together, they took the fight all the way to the halls of the U.S. Supreme Court. (CUB filed an amicus brief in the case.)
The proceedings Wednesday mark just the beginning of the case. Check back to CUB’s WatchBlog for further updates on the future of demand response.