Term: 2015
Docket: 14-840
Federal Energy Regulatory Commission v. Electric Power Supply Association
- Pro
14-840 FERC V. ELECTRIC POWER SUPPLY DECISION BELOW: 753 F.3d 216 GRANTED LIMITED TO THE FOLLOWING QUESTIONS: 1) WHETHER THE FEDERAL ENERGY REGULATORY COMMISSION REASONABLY CONCLUDED THAT IT HAS AUTHORITY UNDER THE FEDERAL POWER ACT, 16 U.S.C. 791a et seq., TO REGULATE THE RULES USED BY OPERATORS OF WHOLESALE ELECTRICITY MARKETS TO PAY FOR REDUCTION IN ELECTRICITY CONSUMPTION AND TO RECOUP THOSE PAYMENTS THROUGH ADJUSTMENTS TO WHOLESALE RATES. 2) WHETHER THE COURT OF APPEALS ERRED IN HOLDING THAT THE RULE ISSUED BY THE FEDERAL ENERGY REGULATORY COMMISSION IS ARBITRARY AND CAPRICIOUS. CONSOLIDATED WITH 14-841 FOR ONE HOUR ORAL ARGUMENT. JUSTICE ALITO TOOK NO PART. CERT. GRANTED 5/4/2015 QUESTION PRESENTED: Whether the Federal Energy Regulatory Commission reasonably concluded that it has authority under the Federal Power Act, 16 U.S.C. 791a et seq., to regulate the rules used by operators of wholesale--electricity markets to pay for reductions in electricity consumption and to recoup those payments through adjustments to wholesale rates. LOWER COURT CASE NUMBER: 11-1486, 11-1489, 12-1088, 12-1091, 12-1093
In the case of Federal Energy Regulatory Commission v. Electric Power Supply Association, 2015, the Supreme Court ruled in favor of the Federal Energy Regulatory Commission (FERC). The dispute centered around FERC's Order No. 745 which required wholesale market operators to pay retail power consumers for reducing consumption during peak demand periods at rates equal to what generators would have received for producing an equivalent amount of energy. This practice is known as "demand response". The Electric Power Supply Association argued that this order overstepped FERC’s jurisdiction because it effectively regulated retail electricity markets, a domain reserved for states under federal law. However, the Supreme Court upheld Order No. 745 by a vote of six-to-two stating that while FERC cannot regulate within the retail market directly, it can regulate practices affecting wholesale rates even if they indirectly influence those in the retail market.
In the dissenting opinion for Federal Energy Regulatory Commission v. Electric Power Supply Association, Justice Scalia, joined by Justice Thomas, argued that the Federal Energy Regulatory Commission (FERC) had overstepped its jurisdictional boundaries as defined in the Federal Power Act. They contended that FERC's regulation of demand response programs directly intruded into retail electricity markets which are under state control. The justices also disagreed with how FERC determined compensation rates for demand response providers, arguing it was arbitrary and capricious because it resulted in unjust and unreasonable rates contrary to what is stipulated in section 206 of the Federal Power Act. Therefore, they believed that both on grounds of jurisdiction and rate setting methodology used by FERC were unlawful.
