A DC Circuit Court Decision finds a flawed regulatory construct in the power industry: here is a properly functioning marketplace proposal

“To the degree different industry stakeholders may now have a challenge on their hands related to the court’s decision, the root cause is a flawed regulatory construct.” -- The DC Circuit Court Decision on Order No. 745

To address the Demand Response root cause, please take a look at the EWPC Blog post A complete and fully functional electricity restructuring proposal. It will be easy to see in that post that the source of that root cause is in the 1992 United States Energy Policy Act. Further support for the marketplace can be found through the post EWPC Blog full access index update now with over 890,000 total views,

Such a proposal can be said to have socially started with the article “a Dominican strategy: customer-oriented risk management,” published in the May/June 2006 issue of the IEEE Power & Energy magazine. During the acceptance and publication process of that article, it seems that the first article that addressed the root cause is An Alternative Business Case for Demand Response, published by EnergyPulse on November 2005. While the first article was considered to have a scope for developing countries, the second might now be considered a seminal article, not just for the US, but for the whole global electric power industry.

At last, the DC Circuit Court Decision, fully supports the alternative: “The natural place for DR is on the retail side of the markets, where customers can observe electricity prices and make a choice about whether to consume energy or to curtail their demand for that energy. By necessity under the FPA, this will require FERC to actively engage the states, which have the retail jurisdiction FERC lacks. In my mind, enabling functioning price-responsive demand is the right answer to the conundrum in which we now find ourselves, and it is where the Commission should expend the bulk of its efforts. Price-responsive demand cuts to the heart of the matter. It provides all of the proper price-forming benefits the Commission seeks, but without concocting unwieldy, convoluted and bureaucratically complex schemes to pay consumers not to consume power. It pierces the veil that exists between the wholesale and retail sides of the electricity business; a veil made thick by the statutory construct that separates federal jurisdiction from that of the states. In a world of robust price-responsive demand, end-use consumers, aided by advanced demand side management devices enabled by a smarter grid, are able to fulfill their role on the demand side of the equation. The result, in short, would be a properly functioning marketplace.”