# What is the significance of FERC v.

Electric Power Supply Assn.

case?

legalpdf.io · August 4, 2026

> The Supreme Court's 2016 decision in this case affirmed FERC's authority to regulate demand response in wholesale electricity markets. The case...

The Supreme Court's 2016 decision in this case affirmed FERC's authority to regulate demand response in wholesale electricity markets.

The case involved a challenge by the Electric Power Supply Association and other industry groups who argued FERC lacked jurisdiction over demand response.

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The Court found that the Federal Power Act grants FERC jurisdiction over "the sale of electric energy at wholesale in interstate commerce," which includes regulating practices affecting wholesale rates, such as demand response.

Justice Antonin Scalia's dissenting opinion in this case was the last opinion he wrote before his death in 2016.

The Court rejected the industry's claim that FERC's decision to compensate demand response providers at the same locational marginal price as generators was arbitrary and capricious.

FERC had concluded that paying demand response providers the same price as generators was necessary to maintain just and reasonable wholesale rates and ensure grid reliability.

This decision solidified FERC's authority to incentivize and compensate demand response as a resource in wholesale electricity markets.

Demand response allows consumers to be compensated for reducing their electricity usage during times of peak demand, helping to balance supply and demand.

The case had implications for the growing role of distributed energy resources and consumer participation in electricity markets.

It represented a victory for FERC in asserting its jurisdiction over wholesale market design and operations under the Federal Power Act.

The decision was seen as an important precedent for FERC's ability to adapt electricity regulation to evolving technologies and market structures.

Legal experts viewed the case as a significant energy law decision that could shape the future of electricity markets and regulation.

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