Court Ruling on Demand Response Breeds Uncertainty

Officials at PJM Interconnection are reviewing a Friday federal appeals court ruling that invalidated a 2011 Federal Energy Regulatory Commission order providing incentives for electricity users to consume less power, a practice known as demand response.

FERC has no jurisdiction over demand response, the court said.

The court ruling strikes a blow to the Obama administration's energy efficiency efforts and injects a large degree of uncertainty into how the rapidly expanding demand-response industry will play a role in the nation's electricity markets.

The divided ruling by the U.S. Court of Appeals for the District of Columbia Circuit effectively said FERC overstepped its authority under the Federal Power Act in its Order 745, ruling that demand response is a function of retail electricity markets, which are governed by the states.

Court Ruling on Demand Response Breeds Uncertainty