Many issues facing FERC in 2014 have carried over to 2015. Topping the list is the uncertain future of demand response in wholesale electricity markets. Demand response’s future hinges on decisions at FERC, in the federal courts, and now in Congress. Last May, the D.C. Circuit voted 2 to 1 that FERC lacks jurisdiction over demand response in wholesale energy markets. This unexpectedly broad ruling rocked the electric industry, which had thought the court would merely rule on the reasonableness of FERC’s demand response compensation scheme. FERC asked all the D.C. Circuit judges to rehear the “EPSA decision,” but they declined to do so. On January 15, the U.S. Solicitor General will file a petition for a writ of certiorari with the Supreme Court, asking it to review EPSA. Others, including demand response providers and state public utility commissions, will also seek Supreme Court review. It is, of course, uncertain whether the Supreme Court will grant the petitions, and if it does, whether it will reverse EPSA.
The D.C. Circuit has stayed its order while all this plays out, but that has not moderated the filings at FERC to nevertheless remove demand response from both energy and capacity markets. Also, in November, U.S. Senator Martin Heinrich (D-NM) introduced a bill to amend the Federal Power Act to effectively overrule EPSA by authorizing FERC to include demand response in wholesale energy, capacity and ancillary service markets. Heinrich will reintroduce his bill soon. Rumor has it bets are being placed that demand response will again top the list of unsettled FERC matters in 2016.
Originally published in the Friday Burrito, published by 2015 Foothill Services Nevada Inc.
