Voltus Inc., an energy resource aggregator, has filed a complaint against the Midcontinent Independent System Operator (“MISO”) with the Federal Energy Regulatory Commission (“FERC“).[1] The complaint takes issue with MISO’s recent order that allows states to opt out of FERC’s 2008 order allowing demand response programs in wholesale markets.[2]

Demand response programs give consumers the opportunity to substantially affect the electric grid by shifting their electricity usage from peak demand times to lower electricity use periods, thereby preventing the grid from overloading.[3] Demand response programs also pay consumers based on how much they reduce their electricity use once they have chosen an energy reduction plan.[4] However, MISO has allowed states within its territory to withhold energy resource aggregators from freely participating in the MISO wholesale market through its opt out provision.[5]

MISO is a regional transmission organization (“RTO”) responsible for the coordination of the wholesale bulk power and electric transmission system in fifteen U.S. states and one Canadian province.[6] It manages the operation of more than 65,000 miles of high-voltage transmission and approximately 185,000 megawatts of power generating resources across its footprint, making it one of the world’s largest energy markets.[7] As an energy resource aggregator, Voltus seeks to expand the use of demand response programs with the aim of reducing energy and increasing overall efficiency.[8]

Voltus alleges that MISO’s policy is inconsistent with the federal government’s jurisdiction under the Federal Power Act, saying in its complaint that “states do not have the authority to directly determine whether resources are permitted to participate in RTO/ISO markets.”[9] The company also alleges that the MISO’s “opt out” policy has “significantly impeded demand response development in the grid operator’s footprint” and that they shouldn’t face barriers to markets that other resources don’t face.[10]

In 2019, a new FERC rule directed RTOs to allow aggregators like Voltus into wholesale markets with “proper recognition.”[11] The D.C. Circuit recently upheld FERC’s rule after utility commissioners argued the rule intruded on state electricity authority, concluding “FERC has the exclusive authority to determine who can participate in wholesale electricity markets.”[12]

More cases like Voltus are likely to arise as other RTOs claim state sovereignty as justification for using opt out provisions, raising issues of federalism in energy markets.

[1] Michael Phillis, FERC Told Its Power Demand Rule Limits Market Access, Law 360, https://www.law360.com/environmental/articles/1321631/ferc-told-its-power-demand-rule-limits-market-access?nl_pk=dcab58a6-2235-4173-be1d 4ca85d6e9f8e&utm_source=newsletter&utm_medium=email&utm_campaign=environmental (Oct. 21, 2020).

[2] Id.

[3] U.S. Department of Energy, Demand Response, Activities, https://www.energy.gov/oe/activities/technology-development/grid-modernization-and-smart-grid/demand-response (last visited Oct. 29, 2020).

[4] Spencer Fields, Demand response programs explained, Energy Sage, https://news.energysage.com/demand-response-programs-explained/ (Apr. 19, 2019).

[5] Complaint at 4, Voltus Inc. v. Midcontinent Indep. Sys. Operator, Inc. (FERC Oct. 20, 2020) (No. EL20), https://www.law360.com/articles/1321631/attachments/0.

[6] Phillis, supra note 1.

[7] MISO, Corporate Fact Sheet, Corporate Information, https://www.misoenergy.org/about/media-center/corporate-fact-sheet/ (July 20,2020).

[8] Kelly Yazdani, Accelerating Our Mission – doing more good, faster, Voltus, https://www.voltus.co/tag/demand-response/ (Oct. 29, 2020).

[9] Complaint, supra note 5, at 8.

[10] Id. at 7.

[11]Keith Goldberg, DC Circ. Backs FERC Energy Storage Rule, Law 360, https://www.law360.com/articles/1290934/dc-circ-backs-ferc-energy-storage-rule (July 10, 2020).

[12] Id.