U.S. Senator Martin Heinrich, a member of the Senate Energy and Natural Resources Committee, has introduced a bill (S. 2947) to remove barriers to creating a cleaner, more consumer-friendly electric grid.
The bill clarifies that the Federal Energy Regulatory Commission (FERC) has the legal authority to require regional grid operators in interstate wholesale markets to allow consumers to be compensated for voluntarily reducing their electricity consumption-a tool referred to as demand response. By providing incentives for consumers to reduce their use of power, demand response lowers overall electricity costs, improves reliability and efficiency, and reduces emissions.
“Modernizing our electrical grid is central to becoming a nation that’s more energy efficient and provides cost savings for everyone,” said Sen. Heinrich. “There is no kilowatt-hour more valuable than the one you don’t use in the first place. This bill is a small fix but with big implications for growing the economy, and is central to slowing the effects of climate change and creating a healthier environment for future generations.”
There are currently six multi-state independent grid operators, primarily in the East, Midwest and California, that are responsible for assuring the reliability of the power supplied to the local utility companies and keeping the cost of power down. FERC’s authority to regulate these interstate markets for electricity arises under the 80-year old Federal Power Act. However, the law was written for a different era when there were no regional power grids and few interstate sales of electricity. Though the law gave FERC clear authority over matters affecting wholesale power rates, there is some question whether Congress intended a reduction in power use to be considered on equal footing with the generation of power, even though both clearly affect the rates consumers pay for power.
The U.S. Court of Appeals for the District of Columbia Circuit on May 23, 2014 ruled that FERC did not have the authority to promote demand response as an alternative to the increased generation of power. Senator Heinrich’s bill simply clarifies that FERC has the authority under the Federal Power Act.