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SCOTUS Sides With Obama, FERC Stays

By Jonathan R. Tung, Esq. on January 29, 2016 | Last updated on March 21, 2019

On Monday, SCOTUS helped solidify one of President Obama's major policy goals by ruling in favor of the "demand response" provisions of the Federal Energy Regulatory Commission (FERC).

The decision appears to be the end-of-the-line for major opponents of the regulation now that FERC has received the Supreme Court's blessing.

"Demand Response"

At issue was the provision included in the FERC law intended to manage peak energy use consumption. Under "demand response," local and regional electricity grid operators agree to pay large sums of money to large peak energy consumers like schools, businesses, and hospitals in order to ease them off of use during those times.

Analysts have had conflicting opinions about the rule. Indeed, controversy revolving around the role of the federal government in the regulation of retail energy use has reached a high point. Utility trade groups including EPSA have obviously challenged the regulation because it directly and negatively affects demand for energy.

Energy Policy Push

For years, President Obama had pushed for broad and sweeping policy reforms aimed at lowering energy costs, reducing consumption, and reducing overall national carbon footprints.

SCOTUS ruled and reversed a DC Circuit ruling that had earlier determined that the "demand response" regulation of FERC was unconstitutional. FERC is the go-to federal regulatory law exerting jurisdiction over the wholesale electricity markets. States typically run the show with regards to the retail markets. The challengers' argument was simple: FERC overreaches and extends its authority into the retail markets, a federal no-no.

But Justice Kagen, who wrote for the majority, disagreed. "The commission's rule addresses -- and addresses only -- transactions occurring on the wholesale market."

Monday's ruling struck the White House as good news: "This decision allows us to continue realizing billions in annual savings... [and help] integrate more energy more efficiently [and bring] more renewable energy onto the power grid," said White House spokesman Frank Benenati.

Proponent Perks

EnerNOC, Inc., one of companies that supported the bill, was rewarded for its loyalty and gained about $3 on Nasdaq trading immediately following the ruling. Companies that opposed the regulation fell overall given the SCOTUS ruling. The company's stock has since cooled down, however.

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