On January 25, 2016, the U.S. Supreme Court upheld in a 6-2 decision the Federal Energy Regulatory Commission’s (FERC) Order 745, which requires wholesale market operators to pay the same compensation to demand response (DR) providers for conserving energy as paid to generators for producing it. In doing so, the Court found that under the Federal Power Act, FERC can regulate wholesale markets and other matters “directly affecting” wholesale rates if it “affects—even substantially—the quantity or terms of retail sales.” While this ruling does not necessarily clarify the “bright line” between federal and state regulation of the power grid, it expands the area inside the line where federal regulation constitutes the final word.

As states continue to evaluate the Clean Power Plan, a support for mass-based implementation approach seems to be gaining momentum. Mass-based approaches can be simpler than rate-based approaches to administer as well as enable more well-known emissions-style trading schemes.