Supreme Court Decides in Favor of Clean, Low Cost Energy in Landmark Demand Response Case

The Supreme Court announced an historic decision today that is a major victory for customer-friendly, clean, low-cost, and reliable energy. 

“Today’s Supreme Court decision is a victory for all Americans who want greater choice and value broader customer access to clean, low-cost energy,” said Fred Krupp, president of EDF. “Demand response is helping millions of Americans get low-cost, clean and reliable electricity. Today’s court ruling will help expand customer choice, and solidify demand response as a crucial part of our clean energy future.”

The Supreme Court reversed a lower court ruling, and decided in favor of the Federal Energy Regulatory Commission’s (FERC) well-designed clean energy policy in Federal Energy Regulatory Commission v. Electric Power Supply Association (Docket No. 14-840) and EnerNOC, Inc. v. Electric Power Supply Association (Docket No. 14-841).The Supreme Court vote was 6-to-2 in the case; Justice Alito was recused. Environmental Defense Fund (EDF) and a host of other environmental organizations jointly submitted a “friend of the court” brief in the case.

Justice Kagan, joined by Chief Justice Roberts and Justice Kennedy, wrote the majority opinion, saying, “The Commission, not this or any other court, regulates electricity rates.”

The case centered on FERC Order 745, the landmark policy that provides fair-market compensation for demand response in wholesale energy markets. Demand response is an energy conservation tool that relies on people and technology, not power plants, to meet America’s electricity needs affordably. The D.C. Circuit Court of Appeals ruled against FERC Order 745 in May of 2014; this was a deeply divided decision with a vigorous dissent by Judge Harry Edwards. FERC asked the Supreme Court to review that decision.

The Supreme Court case focused on two central questions, one about FERC’s authority and a second about challenges to central provisions to the order providing for fair valuation of demand response. The Court decided in FERC’s favor on both counts today, underscoring FERC’s role as the government entity tasked with ensuring our electric rates are “just and reasonable.” Today’s Supreme Court decision allows this clean energy resource to continue providing benefits to customers, a reliable electricity grid, and environment.

In addition to EDF, a broad and diverse group of entities submitted briefs in support of FERC. Grid operators spoke to demand response’s beneficial role in maintaining a reliable grid, consumer advocates highlighted the money demand response saves ratepayers, and leading economists supported the method FERC used to compensate the resource. Leading legal scholars noted how Order 745 helps to ensure just and reasonable rates, consonant with FERC’s central responsibility under the Federal Power Act, and states pointed to the benefit wholesale demand response provides to their clean energy initiatives.

You can find all the briefs in the case here, and read more about both demand response and this case on our website.