The Supreme Court on Monday upheld the federal government’s ability to spur incentives for industrial businesses, schools and other large energy consumers to reduce power usage at times of peak demand.

The court, in a 6-2 ruling by Justice Elena Kagan, said the Federal Energy Regulatory Commission acted within its powers when it issued an order in 2011 requiring higher levels of compensation for some power customers that agreed to reduce their electricity use.

The Court likely is right on this, in that FERC’s rule is within the confines of the underlying law. However, this still is the government picking winners and losers, and this still is the government dictating to private enterprise what it must do.

The corrective answers that are required, then, are two: one is to withdraw FERC’s authority to issue such rules, to rescind Congress’ delegation of such rule-making to FERC (such a rescission is required across the board, but that’s for another writing).

The other required answer is to alter the underlying law that the FERC rule was…fleshing out. It’s a law that is no longer necessary and that, as the FERC rule demonstrates, has become vulnerable to Executive Branch abuse.

That law is Section 201 of the Federal Power Act, which

empowers FERC to regulate “the sale of electric energy at wholesale in interstate commerce.”

Congress’ authority (not an Executive Branch agency’s) to regulate interstate commerce is constitutionally limited to regularizing commerce among the States, not to dictate the terms of that commerce. Of course, for Congress to recover this authority and its limits, a third required answer consists of correcting a number of Supreme Court mistakes regarding how far Big Government may reach inside any State to regulate commerce there.