The Supreme Court just handed down a victory to climate and clean energy supporters.
On Monday, the court upheld the Federal Energy Regulatory Commission’s (FERC) demand response rule, which was created in 2011 and orders utilities to compensate consumers for reducing their use during peak hours — the times of day, typically in the morning or evening, when most people home and using their electricity. As Justice Elena Kagan explains in the court’s opinion, demand response “arose because wholesale market operators can sometimes — say, on a muggy August day — offer electricity both more cheaply and more reliably by paying users to dial down their consumption than by paying power plants to ramp up their production.”
Electricity producers and grid operators challenged the rule in court, saying FERC overstepped its authority, but the Supreme Court ruled 6–2 against the challenge. FERC’s authority does extend to wholesale power markets, and the court ruled that, in this case, FERC was simply exercising that authority.
That’s good news for anyone concerned about climate change — and cheap electricity, said Mark Kresowik, regional representative for the Sierra Club. Demand response is “a critical tool for keeping electric prices stable and low, because as prices rise, the reduction in the use of electricity keeps prices from rising too much,” he said.
It’s also “an excellent way to integrate large amounts of variable energy resources, like wind and solar, into the electric grid,” Kresowik said. That’s because, as one expert explained to E&E; News last year, demand response incentivizes customers to use energy during times when the wind is gusting and the sun is shining most strongly. That helps the grid operate smoothly, even with the addition of intermittent renewables.
It’s a “hugely beneficial” rule, Kresowik said, because giving consumers an incentive to reduce their electricity use during peak hours means that the emissions associated with that electricity use will also go down.
“You’re significantly reducing pollution by using this process,” he said. And, since demand response is helpful for integrating wind and solar into the grid, it’s “critical for implementing things like the Clean Power Plan and renewable energy standards in a way that keeps electricity prices stable and affordable.”