U.S. Court of Appeals for the DC Circuit vacates FERC Order 745

The Federal Regulatory Energy Commission (FERC) Order 745, which required competitive markets to pay the full wholesale clearing price to demand-response (DR) resources participating in energy markets administered by independent system operators (ISOs) and regional transmission organizations (RTOs), was rejected in late May by the U.S. Court of Appeals for the District of Columbia Circuit. The court’s decision held that FERC lacks jurisdiction over DR and therefore had no authority to issue Order 745, and that FERC’s requirement that DR be paid the full clearing price was not “just and reasonable.” The court’s decision applies to FERC and its rules under Order 745; the ruling does not apply directly to ISO New England or other ISOs and RTOs. Therefore, until further actions are taken, the ISO’s current tariff and the demand-response rules contained in the tariff continue to apply.