U.S. Court of Appeals’ Panel Decision a Setback for Clean Energy Progress

In a divided opinion, a three judge panel of the U.S. Court of Appeals for the D.C. Circuit overturned an order of the Federal Energy Regulatory Commission (FERC Order No. 745) designed to ensure demand response solutions have access to the wholesale electricity market. The majority opinion was written by Judge Janice Rogers Brown. D.C. Circuit Judge Harry Edwards issued a rigorous dissent, stating that the court’s decision is: “inconsistent with the statute, at odds with applicable precedent, and impossible to square with our [the court’s] limited scope of review.” Demand response is an innovative tool used by utilities and grid operators to reward people who use less electricity during times of peak, or high, energy demand. Environmental Defense Fund (EDF) filed a “friend of the court” brief in defense of these common sense measures. 

“Our nation’s strong interest in clean, reliable and customer-friendly power took a big step backwards today with this unfortunate court decision. Demand response relies on people, not power plants, to meet electrical demand, and is cleaner and more cost-effective than building new generation. As the U.S. advances into the clean energy economy, demand response should play an increasingly larger role in how our electricity is produced, delivered, and consumed. This order stymies that growth.

Today’s Court decision comes as a disappointment to clean energy advocates as well as families and businesses looking to lower their electricity bills. If the U.S. intends to win the race to the multi-trillion dollar, clean energy economy, we need to ensure that our nation’s policies protect our health and environment and boost economic growth by fairly valuing clean energy resources, instead of reinforcing the status quo,” said John Finnigan, Lead Counsel, Environmental Defense Fund.

This was a 2-1 panel decision in which Judge Harry Edwards forcefully dissented that the court’s opinion overturns “a promising rule of national significance” based on grounds that are “inconsistent with the statute, at odds with applicable precedent, and impossible to square with our [the court’s] limited scope of review”:     

“FERC had jurisdiction to issue Order 745 because demand response is not unambiguously a matter of retail regulation under the Federal Power Act, and because the demand response resources subject to the rule directly affect wholesale electricity prices…..The unfortunate consequence is that a promising rule of national significance – promulgated by the agency that has been authorized by Congress to address the matters in issue – is laid aside on grounds that I think are inconsistent with the statute, at odds with applicable precedent, and impossible to square with our limited scope of review. I therefore respectfully dissent.”

See Page 27 and 28 of the Opinion.

EDF believes that the dissent is rigorous and serious consideration should be given to further judicial review.