U.S. Supreme Court

Federal rule promoting reduced energy use is upheld by SCOTUS; environmentalists applaud decision

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The Federal Energy Regulatory Commission had the authority to require compensation for large electricity users that reduce consumption during periods of peak demand, the U.S. Supreme Court has ruled in a 6-2 decision.

At issue was whether the FERC rule was justified by its authority to regulate the sale of wholesale electricity rates, or whether it intruded on state authority to regulate retail sale of electricity. The majority opinion (PDF) by Justice Elena Kagan found that FERC had the authority under its statutory duties to hold down prices and enhance reliability.

“FERC saw that sky-high demand in peak periods threatened network breakdowns, compelled purchases from inefficient generators, and consequently drove up wholesale prices,” Kagan wrote. The required payments address those problems, and fall “within the sweet spot of FERC’s statutory charge,” she said.

The decision was a loss for utilities that claimed FERC was suppressing demand for electricity, according to stories by the Wall Street Journal (sub. req.) and USA Today. But it is “sure to benefit our wallets and the planet,” according to the Natural Resource Defense Council’s Switchboard blog.

“The court’s welcome decision could save customers billions of dollars, move the ball forward in the fight against climate change, and remove barriers to the modernization necessary to achieve a clean, reliable and affordable grid,” the blog says.

Justice Antonin Scalia dissented in a decision joined by Clarence Thomas. Justice Samuel A. Alito Jr. did not participate in the case.

The case is FERC v. Electric Power Supply Association.

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