Fed. Energy Regulatory Comm'n v. Elec. Power Supply Ass'n

Background

A petition asking the Court to review a decision from the D.C. Circuit was granted, and NRG Energy, Inc. was allowed to file a brief as an outside supporter. The dispute concerns rules used by operators of wholesale electricity markets to pay for reductions in electricity consumption and to recoup those payments through adjustments to wholesale rates. The D.C. Circuit had held that the rule issued by the Federal Energy Regulatory Commission was arbitrary and capricious. The cases were consolidated for the Supreme Court and one hour was allotted for oral argument. Justice Alito did not take part.

Reasoning

The Court limited review to two core questions: whether FERC reasonably concluded it has authority under the Federal Power Act to regulate those market payment and rate-recoupment rules, and whether the D.C. Circuit was wrong to call FERC’s rule arbitrary and capricious. By granting review on those questions, the Court will decide if FERC’s rulemaking power reaches the specific market practices at issue and whether the lower court applied the correct standard. The grant does not resolve the merits; it merely sends the legal questions to the Supreme Court for full briefing and argument.

Real world impact

The eventual decision could determine whether federal regulators may set or approve how market operators pay for reduced electricity use and then recover those costs through wholesale rates. That outcome could affect market operators, utilities, businesses that participate in payment programs, and how wholesale electricity prices are set. Because this order only grants review, the current lower-court holding is under Supreme Court consideration and could change after argument.