Supreme Court appears split over reach of federal utility regulator

Supreme Court justices appeared split during oral arguments Wednesday in a case that could pare back the federal government's influence on state electricity markets, hindering President Obama's clean energy and climate change goals.

Chief Justice John Roberts and Justice Antonin Scalia, along with Justice Anthony Kennedy, challenged how far the Federal Energy Regulatory Commission's authority goes in affecting prices in the markets that states oversee.

At the center of the case is the commission's landmark "demand response" program, which directs grid operators to pay consumers to lower their electricity use at times when the grid is stressed. Environmentalists say the program is supremely important to intergrate solar and wind and for limiting the need for new fossil-fuel power plants. FERC is being challenged over the extent of its authority to run such a program.

The commission argued that the program operates only within its wholesale market jurisdiction, and therefore it has the authority to reward demand response providers to keep energy prices low and prevent blackouts.

But the D.C. Circuit Court of Appeals said last year that the regulator doesn't have that authority because the program affects rates in the electric markets controlled by states. The commission appealed the lower court's decision to the Supreme Court.