FERC’s ‘Demand Response’ Rule Upheld by U.S. Supreme Court
January 25, 2016 — 10:03 AM EST Updated on January 25, 2016 — 10:14 AM EST
The U.S. Supreme Court dealt a blow to power generators, upholding a federal rule aimed at encouraging industrial consumers to cut electricity use.
The justices, voting 6-2, said the Federal Energy Regulatory Commission acted within its authority with the order, which sets rates for an energy-saving practice known as “demand response.” The court also upheld the formula used by FERC.
The ruling is a missed opportunity for the country’s biggest energy generators, which were seeking a chance to widen their profits. A decision invalidating the rule would have benefited NRG Energy Inc., FirstEnergy Corp., Exelon Corp., Dynegy Inc., Talen Energy Corp., Calpine Corp., Public Service Enterprise Group and American Electric Power Co.
Major energy consumers, including aluminum producer Alcoa Inc., backed the rule, as did smart-grid companies such as EnerNOC Inc., which help large consumers reduce their power use.
The case centered on the U.S. Federal Power Act, which lets FERC regulate rates only at the wholesale level and leaves retail regulation in the hands of the states.
Justice Elena Kagan wrote the court’s majority opinion. Justices Antonin Scalia and Clarence Thomas dissented. Justice Samuel Alito didn’t take part in the case because of a stock holding.
New fixtures, rebates expected to save Duke Street library $15,000 this year alone.
GIL SMART, Associate Editor
The problem with an old building is that while it might have been built to appear ornate and majestic, it most likely wasn’t built to be energy efficient.
So when Pennsylvania’s utility rate caps expired in 2010 and the price of electricity began rising, officials at the Lancaster Public Library were worried.
From about $45,000 in 2009, the library’s electric bill rose to $56,000 in 2010 – and was projected to spike to $63,000 this year. With library funding falling, it was an added expense the North Duke Street library simply couldn’t afford.
Ultimately, it didn’t have to.
With the aid of LIVE Green, a Lancaster-based environmental group, and rebates from state-mandated energy conservation programs, the library replaced all of its outdated lighting fixtures with modern, compact fluorescent lighting – which are expected to lower the library’s lighting costs this year by some $15,000.
The new fixtures, installed by Richards Energy Group, Manheim, cost $46,000 – but after rebates they only cost the library $26,000, said library Executive Director Herb Landau.
The library, he noted, will recoup the cost within two to three years.
LIVE Green approached the library after receiving funding through the Lancaster County Community Foundation’s “Green Facilities Program.” This enabled the local environmental organization “to do comprehensive energy assessments of ‘public use buildings’,” said LIVE Green’s Director of Programs Fritz Schroeder. “With the library, we had a number of outdated systems, but lighting is one of the real low-hanging fruits. If your lighting is somewhat outdated, you can really see energy savings almost immediately” by upgrading.
LIVE Green conducted similar assessments for the Lancaster YWCA – which also saw a “big return” by installing new lighting, Schroeder said – and Thaddeus Stevens College of Technology and Susquehanna Association for the Blind & Vision Impaired.
“Sweetening the pot,” Schroeder said, were rebates available from PPL through the state’s Act 129 program, which required electric utilities to reduce customers’ annual electric consumption 1 percent by mid-2011 and 3 percent by mid-2013. As part of that, utilities made rebates on energy-efficient appliances, lighting, and heating and cooling systems; rebates and incentives for home-energy audits; incentives for cutting electricity consumption; and discounted and free compact fluorescent light bulbs.
After the retrofit was completed, PPL sent auditors to inspect the library and ensure the work was done properly before issuing the rebate.
Peter Richards, of Richards Energy Group, said the firm has completed retrofits and rebate applications for more than 75 area projects since May 2009, helping customers reduce their load by more than 1,360 kilowatt-hours, “or about the equivalent of 680 households.”
The company has helped customers get rebates of more than $500,000, with another $117,000 in the queue, he said. Customers include grocery stores, electronics manufacturers, car and tractor dealers, schools, feed mills and retirement communities.
None may need it more than nonprofits squeezed by the economic malaise and subsequent lack of funding.
The Lancaster Public Library’s state funding has been cut by one-third, or $170,000, in the past two years, and city funding has been cut as well. Local fundraising campaigns have helped make up some of the difference.
The library is the county’s largest, serving 40 percent of the population from its downtown location and branches in Leola and Mountville.
It also faces other fiscal hurdles. In May, a huge downpour overloaded a rooftop drain and and funneled water through the second-floor Teen Reading Room and into the Gerald Lestz Reading Room below. Some 500 books – about a quarter of the library’s Lancaster Collection – were soaked. The library sought and received financial gifts – including a $150,000 grant from the Steinman Foundation – to fix the roof. It’s seeking another grant of up to $50,000, and could receive up to $200,000 to help make its roof “green,” planted with vegetation that would absorb rainwater and reduce runoff.
The library is also undergoing a series of renovations, including work on its rooftoop heating, ventilation and air conditioning system, Landau said.
To save money, “we’re putting out fires as they happen,” Landau said. “This building is 57 years old.
“Every little bit helps.”
Gil Smart is associate editor of the Sunday News. Email him at , or phone 291-8817.
FirstEnergy Corp. may not be able to shut down Hatfield’s Ferry and Mitchell power plants in southwestern Pennsylvania by Oct. 9, as the company has previously announced.
The grid operator that schedules electricity for 13 states including Pennsylvania believes that reliability could be compromised if the two coal-fired power stations retire within the next three months.
According to Valley Forge-based PJM Interconnection, the upgrades that would be necessary to the transmission infrastructure to compensate for the lost generation will not be ready by the proposed closing date. Therefore, it’s asking the company to continue operating the plants until reliability issues are addressed.
It’s not yet clear how long that will take.
Ray Dotter, a spokesman for PJM, said the next step is for the grid operator and the company to “identify solutions to the concerns and determine the amount of time required to put the solution into place.”
The Hatsfield’s Ferry plant in Masontown, Greene County, and the Mitchell plant in Courtney, Washington County, together have the capacity to generate about 2,000 megawatts of power.
FirstEnergy spokeswoman Jennifer Young said the company is reviewing PJM’s assessment, but is still going forward with plans to close the plants by Oct. 9.
“We will evaluate the information they have … and continue to have conversations with them,” Ms. Young said.
PJM doesn’t have the authority to force FirstEnergy to keep operating the plants, but no generator has ever denied a request by the grid operator to stay open for reliability reasons.
If FirstEnergy agrees to keep the plants open, it will be compensated for the cost to run them through a transmission charge to PJM customers. The rate will be set by the Federal Energy Regulatory Commission.
Akron, Ohio-based FirstEnergy announced it will shutter the two Pennsylvania plants because demand for electricity is down and plant retrofits would cost the company $275 million to comply with impending environmental regulations.
FirstEnergy cited similar reasons last year when it announced the retirements of nine coal plants, including the Armstrong plant in southwestern Pennsylvania.
Of those nine, however, PJM asked FirstEnergy to continue to operate three plants in Ohio until 2015 to avoid reliability issues. The company agreed to that request.