Demand-side Management

“I believe that this case is the most important case regarding the energy system in this country that the Supreme Court has ever yet to consider.” Strong words from Former Federal Regulatory Energy Commission (FERC) Chairman Jon Wellinghoff (even though the last two landmark cases involving the nation’s electric grid were from 1923 and 1944).

The Supreme Court has agreed to decide whether FERC may regulate “demand response” payments offered to electric utility customers to reduce their electricity use during periods of high demand. State and local governments may save money through participating in demand response programs. But the Electric Power Supply Association argued, and the D.C. Circuit Court of Appeals agreed, that FERC’s Order 745 encroaches on states’ regulatory authority.

THEREFORE BE IT RESOLVED, that The Council of State Governments encourages states to continue to evaluate the energy efficiency and demand reduction opportunities that can be achieved with electric utility grid modernization efforts, subject to the unique and specific circumstances that exist in their respective state.

States and local governments provide more than1,000 incentive programs to encourage energy efficiency. Some economists suggest the benefits of these programs are questionable and some efficiency mandates or programs wind up encouraging more, rather than less, energy consumption - which is referred to as a rebound effect. The concept has stirred strong debate in research groups and think tanks that provide lessons for states as they develop new or monitor existing efficiency programs.

Two years ago, Massachusetts Supreme Court Chief Justice Robert Mulligan was concerned the trial courts in his state weren’t addressing environmental sustainability.

So he put together the Trial Court Energy Task Force, better known as the Green Team.

Suggested State Legislation: According to a Pennsylvania legislative staff analysis, Pennsylvania HB 2200, which became law in 2008, generally provides for the creation and implementation of a statewide energy efficiency and demand-side response program.

Suggested State Legislation: This Act is based on California law. Under California law, the State Energy Resources Conservation and Development Commission (Energy Commission) is charged with monitoring trends in the supply and consumption of electricity and other forms of energy in the state and analyzing the social, economic, and environmental consequences of those trends.

Suggested State Legislation: Kentucky legislative staff report that over the past few years, the Kentucky General Assembly has made great strides in formulating and enacting a comprehensive energy policy for Kentucky that focuses on reducing dependence on foreign oil by encouraging the development of alternative energy resources, and by encouraging energy conservation through the implementation of strategies focused on reducing energy demand.

Stress on the electricity transmission grid is growing.  This stress can be eased by greater interstate cooperation and increased efficiency and conservation measures.