OREANDA-NEWS. The PJM Interconnection is defending its "stopgap" plan to retain some demand response in its capacity market as the best way to deal with uncertainty if the Supreme Court declines to hear a high-profile legal case this spring.

The plan might retain only a fraction of the grid's 11,000MW of contracted demand response, but PJM argues it is better than alternatives that risk wiping out the economic and reliability benefits of load management resources. The grid operator has asked the Federal Energy Regulatory Commission (FERC) to approve the plan before its holds its next forward capacity auction in May.

"The commission may not have an optimal set of options," PJM told the agency last week. "But in the case where the Supreme Court denies [the appeal] before the May auction, the stopgap filing provides the commission a choice."

The stopgap plan is a response to a court case last year that cast doubt on the ability of demand response to remain in wholesale power markets. The Supreme Court could delay that ruling if it agrees to review an appeal filed by the US government, but PJM worries that demand response could be blocked from the capacity auction unless it has a stopgap plan that kicks in if the court rejects the case.

Under the PJM plan, demand response could no longer offer into the auction as a supply of capacity. Instead, load serving entities that control demand response could cut their obligation to procure capacity. The plan has been controversial because it would leave out industrial customers and curtailment service providers that represent most of the grid's demand response capacity.

PJM in its filing said only 20pc of demand response capacity for the 2014-15 capacity year, or 1,866MW, is controlled by load serving entities. The grid operator said there are additional amounts of demand response that could participate under the stopgap plan. PJM chief executive Terry Boston last month estimated that half of its demand response capacity might remain under the plan.

PJM in its filing defended the stopgap approach because it said the alternatives have a much higher legal risk of blocking all demand response from its next capacity auction. The grid said its plan ensures that demand response provided by load serving entities is not "swept away" and left out of the auction.

PJM has asked the commission to decide on its stopgap plan by 1 April. The Supreme Court could decide whether to take the demand response case by as early as 23 March.