SCOTUS decision affirms FERC authority

January 25, 2016

In a 6-2 decision authored by Justice Elena Kagan, the Supreme Court today held that the Federal Energy Regulatory Commission (FERC) has authority over “demand response,” bids of reductions in electricity consumption into wholesale electricity markets. “This decision reaches exactly the right result,” said Joel Eisen, a Richmond Law professor who co-authored an amicus brief in the case. “The Court also held that FERC’s formula for pricing demand response at the market price —the same price paid to generators—was not arbitrary and capricious,” Eisen explained. The Court reversed a decision of the D.C. Circuit Court of Appeals that had invalidated FERC’s demand response rule.

Three years ago, Eisen’s law review article on FERC’s rule stated that the Commission had authority over demand response, notwithstanding its opponents’ claims. In addition, his upcoming law review article demonstrates that nearly a century of cases construing the “practices affecting rates” language in the Federal Power Act and other regulatory statutes with the same language, dating to the Interstate Commerce Commission Act, supports the position the Court took. “Given this historical context, I was heartened to see the Court’s conclusion today supporting FERC jurisdiction over demand response,” said Eisen.

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