FERC, in a ruling on the participation of Kentucky energy efficiency resources in PJM, asserted that it has jurisdiction over the participation of energy efficiency resources from retail customers in wholesale markets, and said state regulators cannot bar such participation, absent FERC's approval

"We find that the Commission has exclusive jurisdiction over the participation of EERs [energy efficiency resources] in wholesale markets; that RERRAs [retail regulators] may not bar, restrict, or otherwise condition the participation of EERs in wholesale electricity markets unless the Commission expressly gives RERRAs such authority; and that Order No. 719 does not provide for a RERRA to exercise an opt-out and bar or restrict the sale into the wholesale electricity markets of EERs originating in their state or local area," FERC said

FERC based its finding on its reasoning that, "Section 205 of the FPA tasks the Commission with ensuring that all rates and charges for or 'in connection with' the transmission or sale for resale of electric energy in interstate commerce, and rules and regulations 'affecting or pertaining to' such rates or charges are just and reasonable."

"Like compensation for demand response, the Commission has jurisdiction over the participation of EERs in organized wholesale markets as a practice directly affecting wholesale markets, rates, and prices," FERC said

Despite FERC's finding, it ruled the Kentucky PSC can bar retail energy efficiency from PJM due to a condition granting such authority agreed to, and approved by FERC, as part of the integration of Kentucky Power into PJM.

Link to order