AG Healey praises Supreme Court decision on 'demand response'

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State Attorney General Maura Healey welcomed Monday's U.S. Supreme Court decision upholding a rule that lets federal regulators urge factories, businesses, schools, hospitals and shopping centers to reduce electricity consumption at peak times, such as heat waves and extreme cold spells, in exchange for price breaks.

The approach, known as "demand response," lowers costs for consumers and lessens the risk of blackouts.

"I applaud the Supreme Court's decision to uphold the authority of the Federal Energy Regulatory Commission to incentivize customers to reduce their use of power during periods of high electricity demand," Healey stated in an email message.

"The decision supporting the inclusion of 'demand response' in the wholesale energy market will ensure that this common-sense and proven approach to lowering energy costs and prompting electric reliability will continue to grow and thrive," she said.

The Supreme Court decision also supports a study commissioned by Healey's office last summer in connection with Kinder Morgan's proposed 420-mile, Tennessee Gas Co. Northeast Energy Direct pipeline. The findings demonstrated that reduced power consumption during peak demand can control costs and provide "a cleaner and more cost-effective alternative to new fossil fuel infrastructure," according to Healey's office.

Last November, Healey released the report by the Analytics Group of Boston stating that new natural gas pipelines aren't needed in New England because the region is unlikely to face electricity supply shortages over the next 15 years. Kinder Morgan blasted the study as "seriously flawed" because, the company argued, it did not take into account what it described as expected shortfalls in natural gas supplies as soon as 2018.

The attorney general has urged the Federal Energy Regulatory Commission, or FERC, to scrutinize Kinder Morgan's application for its $5 billion pipeline project. FERC may rule by November, and if it's favorable, the company aims to build the pipeline and put it into service by November 2018.

The company's preferred pipeline route stretches from the Marcellus shale fields of southwest Pennsylvania to Wright, N.Y., west of Schenectady.

Then it heads eastward, entering Berkshire County from Stephentown and crossing portions of Hancock, Lanesborough, Cheshire, Dalton, Hinsdale, Peru and Windsor before slicing through Hampshire and Franklin counties, jogging northward across 70 miles of southern New Hampshire, including 17 towns, before terminating in Dracut, Mass., north of Lowell.

The High Court's 6-2 ruling reverses a May 2014 decision by the U.S. Court of Appeals in the District of Columbia to eliminate the FERC regulation issued in 2011.

Writing the Supreme Court's majority decision on Monday, Justice Elena Kagan explained that "demand response" arose "because wholesale market operators can sometimes — say, on a muggy August day — offer electricity both more cheaply and more reliably by paying users to dial down their consumption than by paying power plants to ramp up their production."

Environmental groups welcomed the ruling. " 'Demand response' programs make energy cheaper, ensure the reliability of the grid, and protect our air and water from fossil fuel pollution," Casey Roberts, a lawyer with the Sierra Club, said in a statement. The White House also cheered the Supreme Court decision.

"Demand response" cuts into the profits of companies that own power plants, which lose money when price spikes are avoided. Business groups and their supporters said the Supreme Court majority had ignored legal principles that should have constrained FERC.

"The Supreme Court sends a clear message by ruling in favor of FERC's power demand rule: Energy politics are a game that ignores both the rule of law and states' constitutional authority," Myron Ebell of the Competitive Enterprise Institute, a libertarian group, said in a statement.

Information from The New York Times was included in this report.

Contact Clarence Fanto at 413-637-2551.


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