Environmental Defense Fund (EDF), Natural Resources Defense Council (NRDC), Citizens Utility Board (CUB), Sierra Club, ENE (Environment Northeast), and PennFuture support recent decisions by the Federal Energy Regulatory Commission (FERC), PJM Interconnection, Inc. and others to ask that the United States Court of Appeals for the District of Columbia reconsider its decision overturning FERC’s Order 745.
Order 745, issued by FERC in 2011, requires the operators of organized wholesale energy markets to pay “demand response resources” the same price (known as the “locational marginal price”) for decreasing electricity as the market operators pay power plant owners for producing electricity. Customers provide demand response resources by reducing their electricity use, usually during peak periods of demand, in response to a signal from the grid operator and in return for payment for their service. Demand response resources can reduce congestion on the grid and decrease the need to run more expensive, marginal generating units to produce power at periods of high demand – in turn, saving customers money and decreasing carbon and other dirty pollution.
Despite the proven benefits of demand response resources, the association representing electric power suppliers and others sued FERC in federal court. They don’t like Order 745 mainly because demand response cuts into their revenue by lowering power prices. In court, they argued that Order 745 unlawfully intruded into the states’ jurisdiction to regulate demand response, and that the compensation method that FERC set for demand response wasn’t reasonable. EDF, NRDC and CUB submitted a joint amicus brief in the case, defending FERC’s jurisdiction and emphasizing the important value of demand response resources.
Last month, in a 2-1 decision, the D.C. Circuit agreed with the electric power suppliers and invalidated FERC’s Order 745. Concerned that the court departed from settled legal precedent in arriving at its decision and recognizing the critical importance of demand response resources’ participation in wholesale energy markets, FERC, PJM and other parties to the D.C. Circuit case have announced their intention to seek rehearing by an en banc panel (which means all active judges that serve on the D.C. Circuit).
EDF, NRDC, CUB, Sierra Club, ENE and PennFuture recognize the importance of the issues involved in the D.C. Circuit case and agree that not only was the court’s decision in error, but also that the departure from settled court precedent and the exceptional importance of the issues involved merit reconsideration by the full D.C. Circuit. Therefore, EDF, NRDC, CUB, Sierra Club, ENE and PennFuture support petitions by FERC, PJM and other parties asking the D.C. Circuit to reconsider its’ panel’s decision.