Supreme Court takes up fight over power-grid rule

By John Siciliano, John Siciliano

Published December 20, 2015

The Supreme Court will take up a case Wednesday that the Obama administration hopes will reverse a lower court's decision on a landmark electricity rule that pays consumers to use less energy.

The regulation was created by the nation's utility regulator, the Federal Energy Regulatory Commission, at the beginning of the decade. The rule, referred to as Order 745, turns the tables on the traditional relationship between generators and consumers of electricity by treating demand the same as supply.

The rule sparked the ire of power generators that argued in federal appeals court that Order 745 destabilizes the wholesale markets. The generators argue that the pricing mechanisms in the large wholesale markets are meant to incentivize power plants, not resources that reduce demand and produce no power.

The rule compensates consumers for curtailing their electricity use when called upon by a regional grid operator during times when the grid is stressed. Smaller resources like individual homes can be aggregated to lower their electricity use collectively, in which case they receive a rebate on their electric bills.