Supreme Court upholds demand-response payments

Stock of Boston-based EnerNOC soars on ruling

THE US SUPREME COURT ruled 6-2 on Monday that the Federal Energy Regulatory Commission has the authority to pay major consumers of electricity for commitments to use less power during peak demand periods.

The so-called demand response payments, which have been used by federal regulators for more than a decade to help curb peak demand, were challenged by power generators who stood to rake in a lot more profit if they were successful. The power generators prevailed at the appellate level, with the court holding that that the demand-response payments were too big and represented improper intrusion into retail power markets. The Supreme Court disagreed, clearing the way for the practice to continue and even expand.

In New England, the demand-response payments are administered by the regional power grid operator, ISO-New England. A spokeswoman for ISO-New England said the grid operator currently has 700 megawatts of demand-response resources under contract, or about 3 percent of this winter’s forecasted peak of 21,077 megawatts.

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Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

As the Supreme Court explained in its decision, demand-response payments “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 marking more of it.”

EnerNOC, a Boston company that helps firms developer energy conservation measures allowing them to take advantage of demand-response payments, saw its stock price soar in the wake of the court’s ruling. At the close of trading on Monday, EnerNOC’s stock was up $2.89 to $7.05.

Attorney General Maura Healey applauded the Supreme Court’s decision, saying the ruling “will ensure that this common-sense and proven approach to lowering energy costs and prompting electric reliability will continue to grow and thrive.”