I am late in getting to it, but this week's big news is the Supreme Court's decision on demand response in FERC v. Electric Power Supply Association.
Writing for a 6-2 majority, Justice Kagan found that (1) FERC has authority under the Federal Power Act to regulate demand response in wholesale electricity markets, and (2) FERC Order 745's demand response compensation mechanism was not arbitrary and capricious. Justice Kagan was joined by Chief Justice Roberts and Justices Kennedy, Ginsburg, Breyer, and Sotomayor.
Justice Scalia dissented, offering an interpretation of the Federal Power Act that would have precluded FERC from regulating demand response. Accordingly, the dissent did not substantively review the second question in the case, referring only to "strong arguments" from respondents' amici (Slip Op. dissent at *10). Justice Scalia was joined by Justice Thomas.
(Justice Alito recused himself from the case.)
I am delighted with the Court's decision, having represented Stanford Professor Charlie Kolstad as amicus curiae on behalf of the petitioners (along with Wendy Jacobs and Ari Peskoe at Harvard's Environmental Law Clinic). Our brief addressed the second question in the case and, I am proud to say, closely tracks the majority's analysis of Order 745.
In Justice Kagan's words:
The Commission, not this or any other court, regulates electricity rates. The disputed question here involves both technical understanding and policy judgment. The Commission addressed that issue seriously and carefully, providing reasons in support of its position and responding to the principal alternative advanced. In upholding that action, we do not discount the cogency of EPSA’s arguments in favor of LMP-G. Nor do we say that in opting for LMP instead, FERC made the better call. It is not our job to render that judgment, on which reasonable minds can differ. Our important but limited role is to ensure that the Commission engaged in reasoned decision making—that it weighed competing views, selected a compensation formula with adequate support in the record, and intelligibly explained the reasons for making that choice. FERC satisfied that standard.
(Slip Op. at *33.)
I'm very grateful for Charlie Kolstad's time and effort on the case, as well as the amazing work from Wendy, Ari, and their colleagues at Harvard Law School. Great job, everyone!