Energy Bill Overrides State Laws, Mandates Market Access for Aggregators in Large Utility Areas

The Responsive Energy Demand Unlocks Clean Energy Act, or REDUCE Act, is taking a big swing at how electricity markets are run. Specifically, Section 2 mandates that regional power market operators (known as RTOs) must allow retail customer aggregators—think companies that bundle together the energy-saving potential of homes and businesses—to submit bids into the wholesale electricity market.

What’s Actually Changing?

Right now, if you have a smart thermostat, battery storage, or even just agree to power down your business during peak hours, that ‘demand flexibility’ is valuable. This bill forces RTOs to let companies bundle up that flexibility and sell it back to the grid like a power plant would. This mandate only applies in areas served by utilities that distributed more than 4 million megawatt-hours last year—which covers most major metropolitan areas and large regional providers. The Federal Energy Regulatory Commission (FERC) has one year to write the rules for how this all works.

The State vs. Federal Power Play

The biggest feature of this section, and the part that matters most, is that this federal requirement overrides any existing state law or state commission rule that currently prohibits these aggregators from participating in the wholesale market. If a state utility commission has rules limiting who can bid into the market, this bill says, “Thanks for playing, but the federal rule wins.” This is a significant move, essentially centralizing control over market access decisions at the federal level for large utility service areas. For state regulators, this means losing a key piece of their authority over their own grid structure, which could lead to friction.

The Real-World Impact: Competition and Costs

For the average consumer or small business owner, this opens the door for more competition. Companies specializing in demand response—getting paid to not use electricity—will have a clearer path to market. This could stabilize prices during high-demand periods (like a summer heatwave) because the grid can rely on aggregated home and business power cuts instead of firing up expensive, old power plants. For example, a data center or a large retail chain that agrees to shift its operating hours could now participate directly in the wholesale market, earning revenue that might translate into lower operating costs.

However, this change isn't universal. The bill's threshold of 4 million MWh means smaller, often rural, utilities are excluded from this mandate. This creates a two-tiered system where customers of the largest utilities get the benefit of this increased market access, while those in areas served by smaller providers might not see the same competitive benefits or flexibility options. While the goal is efficiency and cleaner energy use by better utilizing smart home tech and commercial energy practices, the implementation will be complicated. FERC's upcoming rules will need to clearly define who counts as an aggregator and how they measure that aggregated power to prevent market confusion or abuse.