The Supreme Court today upheld the Federal Energy Regulatory Commission's authority to regulate demand response programs in wholesale markets. The Court ruled that FERC was within its authority under the Federal Power Act when it issued Order 745, which set standards for demand response practices and pricing in wholesale markets and brought the practice under the agency's jurisdiction, according to a Utility Dive report.
With Order 745, FERC in 2011 determined the price that ISOs and RTOs, responsible for wholesale market operations, should pay for a form of demand-side management that is capable of dispatch. The pricing was new and controversial, but bidding economic demand response into wholesale markets wasn't.
Today's decision was split 6-2, with Justice Samuel Alito recusing himself.
The U.S. Court of Appeals for the District of Columbia Circuit had vacated Order 745 in 2014, agreeing with a group of electricity generators that FERC had overstepped its legal authority and was encroaching on the states' exclusive legal right to regulate retail electricity markets. The Supreme Court majority disagreed, ruling that demand response is primarily a wholesale market function and FERC Order 745 only addresses wholesale market transactions.