FERC seeks rehearing of high-profile energy case

Source: Hannah Northey, E&E reporter • Posted: Thursday, June 12, 2014

The Federal Energy Regulatory Commission is asking a federal appeals court to reconsider its decision to throw out a high-profile ruling that scrapped a critical agency order providing incentives for electricity users to consume less power, a practice dubbed demand response.

The commission today said it will ask the U.S. Court of Appeals for the District of Columbia Circuit to reconsider the case en banc, meaning before all the circuit court’s judges.Last month, the court held that FERC overstepped its authority under the Federal Power Act in pushing through Order 745, an effort to further eliminate barriers for demand-response participants into the wholesale markets (Greenwire, May 23).

The goal of the regulation, which was cheered by environmental groups, was to establish parity between demand-response providers — which pool reduced energy usage by condominiums, hospitals and universities — and retail electricity providers.

Grid operators and power providers, represented by the Electric Power Supply Association, American Public Power Association and others, challenged the rule, claiming FERC was unlawfully wading into retail electricity markets when the Federal Power Act granted the agency jurisdiction solely over wholesale markets. Retail sales, they argued, are left to the states.

FERC will likely hope to bolster its rehearing request by highlighting the dissent of Senior Judge Harry Edwards, who noted that several conditions have to be met before demand-response providers are paid under the order.

Those factors, he contended, largely fall on the retail, not wholesale, market.

“Focusing on the market in which the consumption would have occurred in the first instance,” Edwards, a Democratic appointee, wrote, “one can conceive of [the order] as impermissibly falling on the retail side of the jurisdictional line.”

Edwards also said there was enough ambiguity in the statute on the demand-response issue that FERC deserved deference from the court.

It takes the votes of a majority of the circuit’s judges to grant en banc review, and the court rarely does so.