HKS Affiliated Authors


Demand Response: Getting the Prices Right. William Hogan, March 2016, Paper. "The legal issue over the Federal Energy Regulatory Commission's (FERC) jurisdictional authority to set demand response prices is settled. In the so-called EPSA (Electric Power Supply Association) case, the Supreme Court found for FERC in support of its demand response Rule in Order 745. The second part of the decision addressed the compensation for demand response. Here the Supreme Court held that FERC had followed procedures to ensure that its demand response pricing mechanism is not arbitrary and capricious. The Order 745 demand response compensation mechanism calls for paying the Locational Marginal Price (LMP). The issue here is about the efficiency and incentives of this pricing rule." Link