Not a Lexis Advance subscriber? Try it out for free.

FERC v. Elec. Power Supply Ass'n

Supreme Court of the United States

October 14, 2015, Argued; January 25, 2016, Decided

Nos. 14-840, 14-841

Opinion

 [*766]  Justice Kagan delivered the opinion of the Court.

The Federal Power Act (FPA or Act), 41 Stat. 1063, as amended, 16 U. S. C. §791a et seq., authorizes the Federal Energy Regulatory Commission (FERC or Commission) to regulate “the sale of electric energy at wholesale in interstate commerce,” including both wholesale electricity rates and any rule or practice “affecting” such rates. §§824(b), 824e(a). But the law places beyond FERC’s power, and leaves to the States alone, the regulation of “any other sale” — most notably, any retail sale — of electricity. §824(b). That statutory [***8]  division generates a steady flow of jurisdictional disputes because — in point of fact if not of law — the whole [**668]  sale and retail markets in electricity are inextricably linked.

 [*767]  These cases concern a practice called “demand response,” in which operators of wholesale markets pay electricity consumers for commitments not to use power at certain times. That practice arose because wholesale market operators can sometimes—say, on a muggy August day — offer electricity both more cheaply and more reliably by paying users to dial down their consumption than by paying power plants to ramp up their production. In the regulation challenged here, FERC required those market operators, in specified circumstances, to compensate the two services equivalently — that is, to pay the same price to demand response providers for conserving energy as to generators for making more of it.

Two issues are presented here. First, and fundamentally, does the FPA permit FERC to regulate these demand response transactions at all, or does any such rule impinge on the States’ authority? Second, even if FERC has the requisite statutory power, did the Commission fail to justify adequately why demand response providers and [***9]  electricity producers should receive the same compensation? The court below ruled against FERC on both scores. We disagree.

Federal regulation of electricity owes its beginnings to one of this Court’s decisions. In the early 20th century, state and local agencies oversaw nearly all generation, transmission, and distribution of electricity. But this Court held in Public Util. Comm’n of R. I. v. Attleboro Steam & Elec. Co., 273 U. S. 83, 89-90, 47 S. Ct. 294, 71 L. Ed. 549 (1927), that the Commerce Clause bars the States from regulating certain interstate electricity transactions, including wholesale sales (i.e., sales for resale) across state lines. That ruling created what became known as the “Attleboro gap” — a regulatory void which, the Court pointedly noted, only Congress could fill. See id., at 90, 47 S. Ct. 294, 71 L. Ed. 549.

Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.

136 S. Ct. 760 *; 193 L. Ed. 2d 661 **; 2016 U.S. LEXIS 853 ***; 84 U.S.L.W. 4084; 25 Fla. L. Weekly Fed. S 622

FEDERAL ENERGY REGULATORY COMMISSION, Petitioner (No. 14-840) v. ELECTRIC POWER SUPPLY ASSOCIATION, et al.ENERNOC, INC., et al., Petitioners (No. 14-841)v. ELECTRIC POWER SUPPLY ASSOCIATION, et al.

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Subsequent History: As Revised January 28, 2016.

Prior History:  [***1] ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT *

* Together with No. 14-841, EnerNOC, Inc., et al. v. Electric Power Supply Association et al., also on certiorari to the same court.

Elec. Power Supply Ass'n v. FERC, 753 F.3d 216, 410 U.S. App. D.C. 103, 2014 U.S. App. LEXIS 9585 (May 23, 2014)

Disposition: Reversed and remanded.

CORE TERMS

wholesale, electricity, bids, regulation, wholesale market, energy, rates, generators, consumers, retail, electric energy, sales, retail sale, programs, markets, providers, retail rate, demand-response, prices, purchasers, wholesale price, effective, costs, transactions, reliability, paying, retail market, grid, supply and demand, transmission

Business & Corporate Compliance, Electric Power Industry, Federal Power Act, Federal Rate Regulation, Energy & Utilities Law, Electric Power Rates, Retail Rates, Wholesale Rates, Administrative Law, Judicial Review, Standards of Review, Arbitrary & Capricious Standard of Review