The U.S. Supreme Court backed demand response as an energy conservation strategy in a 6-2 decision Monday, overturning an appeals court ruling that had barred the Federal Energy Regulatory Commission (FERC) from offering consumers incentives to reduce their energy use during periods of peak demand.
Demand response programs “help grid operators avoid blackouts and keep consumer costs down, reducing the need for generators to turn on older, dirtier power plants,” Politico explains. But “many power plant operators in electricity markets across the Northeast and parts of the Midwest have seen their profits shrink from lower energy prices, and they fear greater competition from demand response providers will further erode demand for electricity.”
Those utilities “had argued that the demand response rule had unfairly given FERC authority in the retail power markets, which have traditionally been governed by the states,” Dixon writes. But the Supreme Court “affirmed FERC’s ability to regulate those programs since they affect the wholesale power market, and it said the agency had properly assessed how much the businesses that cut their power consumption should be paid.”