McDonald’s helps Chief Justice Roberts demystify FERC rule

By Robin Bravender | 10/14/2015 03:09 PM EST

Is a federal rule to promote reduced electricity use comparable to government meddling in hamburger prices?

Supreme Court Chief Justice John Roberts thinks so.

The high court today heard arguments surrounding a complicated demand-response rule from the Federal Energy Regulatory Commission, where customers are offered financial incentives to cut off their power use at times of peak energy demand.

Roberts attempted to put it in burger terms.

"If FERC is basically standing outside McDonald’s and saying, ‘We’ll give you $5 not to go in,’ and the price of the hamburger is $3 … the price of a hamburger is actually — I think most economists would say — $8, because if they give up the $5, they’ve still got to pay the $3."

Roberts and his colleagues pressed FERC’s attorney on whether the agency had overstepped its authority to regulate the wholesale electricity market by wading into the retail electricity market — which falls under states’ jurisdiction.

"The point is that … FERC is directly affecting the retail price," Roberts told Solicitor General Donald Verrilli, who represented FERC.

For his part, Verrilli used sports-car prices to counter arguments that FERC’s rule changes the effective rate of retail electricity prices.

"[I]f I go out and buy a Ferrari for $100,000, everybody thinks that the price of the Ferrari is $100,000. Nobody thinks that the price of the Ferrari is actually $107,000 because I’m forgoing the $7,000 tax credit I could get if I bought an electric car," he said. "The rate is what it is. It’s $100,000. And here, the rate is what it is."

The fate of the FERC rule is unclear after conservative members of the court questioned whether the agency had surpassed its authority (Greenwire, Oct. 14).

Click here for a transcript of today’s argument.