EPSA v. FERC: How the court went wrong on demand response.
Bruce Radford is publisher and acting editor of Public Utilities Fortnightly. Reach him at firstname.lastname@example.org.
As I sit down to write, the U.S. Court of Appeals for D.C. Circuit only hours ago dropped a bombshell, declaring in the case of EPSA v. FERC, No. 11-1486, decided May 23, 2014 by a vote of 2-1, that Federal Energy Regulatory Commission Order 745 is completely null and void.
And for that clever bit of timing, waiting until Friday afternoon, so as not to roil markets, I applaud the court. But in forcing reporters back to their computer screens, to give up a portion of their Memorial Day holiday weekends in order to grind out a story to make their Tuesday deadlines, I can only curse.
You see, in treating demand response as the moral equivalent of electric generation, as it did in 2011 in Order 745 - that is, by rewarding forgone consumption with a payment equal to the going wholesale market price for day-ahead energy, known as the locational marginal price, or "full LMP," without any offset for "G" (that being the cost of buying energy that is thereby avoided) - FERC had sought to remove barriers and place DR on an equal footing with power plants. Congress in fact just a few years earlier had told the commission to do exactly that, in sec. 1252 of the 2005 EPACT law.