| LOS ANGELES, June 3
LOS ANGELES, June 3 Federal energy regulators on
Friday said proposed changes to how electricity load reductions
by large energy consumers are measured during system emergencies
may be "unlawful," and that it needs more time to review the
The highly-anticipated decision by the Federal Energy
Regulatory Commission concerns the way so-called demand response
companies like EnerNOC Inc and Comverge Inc
record energy curtailments by their customers.
Demand response companies work with grid operators, utility
companies and large electricity consumers to lower energy use
during expensive peak hours, reducing pressure on the grid.
The rule changes were sought by grid operator PJM, which
wants to use an average of a customer's actual load during the
five peak hours the previous year as a reference point for
measuring load reduction. A customer's demand response
compensation would be capped at that level. PJM has said the
rule changes are aimed at insuring grid reliability.
The changes were opposed by EnerNOC and other demand
response companies, which want to use as a reference point the
amount of energy a customer would have consumed without a system
PJM, which runs the power grid and energy market serving 51
million people from New Jersey to Illinois -- is EnerNOC's top
"We find that PJM's proposed tariff changes have not been
shown to be just and reasonable and may be unjust, unreasonable,
unduly discriminatory or preferential or otherwise unlawful,"
FERC said in its order, which was issued late on Friday.
At the same time, however, FERC said it could not reject the
filing entirely and needed more information. The Commission,
therefore, accepted the rule changes but issued a five-month
suspension during which its staff will weigh additional
"We need additional information so we may determine whether
PJM's proposal is just and reasonable and not unduly
discriminatory," FERC said.
FERC staff must convene a "technical conference" within 60
days, the order said.
EnerNOC said the order was a victory for demand response
"We are extremely pleased with this outcome," EnerNOC
President David Brewster said in an e-mailed statement. "We
applaud FERC staff and Commissioners for taking their time to
thoroughly review all sides of this policy debate and arrive at
the exact right answer: that PJM has not met its burden of
showing that its filing is just and reasonable."
PJM said FERC agreed with its concerns on a key issue.
"In its order, the FERC shares PJM's concern that consumers
in the PJM region will pay only for the capacity that is
actually delivered," PJM spokesman Ray Dotter said. "We will
supply the additional information that the Commission seeks to
support the rule clarifications, which were supported by the
vast majority of our members."
EnerNOC's shares have lost 32 percent this year, in part due
to concerns that PJM's rule changes could hurt profits.
The company has said that 5 to 10 percent of its revenue
would be at risk if FERC ruled in favor of PJM.
EnerNOC shares closed at $16.21 on the Nasdaq, down 47
cents, or 2.8 percent.
(Reporting by Nichola Groom, Editing by Jonathan Thatcher)