Supreme Court to Hear State/Federal Electric Power Cases

Published November 10, 2015

The Supreme Court of the United States (SCOTUS) agreed to hear an appeal of a case to further clarify the authority states have to encourage selective intrastate electric power production in the face of interstate competition regulated by the Federal Energy Regulatory Commission (FERC). This is the second case related to FERC’s authority SCOTUS has agreed to hear this term.

The court announced it would hear arguments in two linked cases W. Kevin Hughes v. PPL EnergyPlus LLC and CPV Maryland v. PPL EnergyPlus. Hughes is the chairman of the Maryland Public Service Commission. The cases concern a Maryland program providing incentives for new power generation. A lower court threw out the state program, finding the incentives infringed on the Federal Energy Regulatory Commission’s jurisdiction after existing plants complained the Maryland law provides unfair advantage to new plants within the state, compared to new plants in the regional wholesale electricity market operated by PJM Interconnection LLC. The Obama administration had urged the high court not to hear the appeal, backing PJM’s and the out of state utilities claims. 

SCOTUS has yet to declare whether it will weigh in on two separate, although related cases involving a similar program in New Jersey.

Control Electric Power, Rates at Issue

Both states developed programs to encourage in-state energy generation through schemes ensuring fixed contract rates and stable revenues from retail electricity purchasers for in state energy producers. Separate federal appeals courts struck down both programs with the judges determining the incentives infringed on FERC’s jurisdiction over wholesale rates for electricity and transmission crossing state lines. 

Maryland, New Jersey and Commercial Power Ventures of Maryland requested the Supreme Court reinstate those programs. State officials say the lower courts inappropriately hampered their ability to ensure adequate and affordable electricity generation and failed to preserve states’ authority over electricity generation within their borders. 

Last month, U.S. Solicitor General Donald Verrilli said the Maryland and New Jersey programs were unlawful, urging SCOTUS to leave in place the rulings striking them down. Despite states’ contentions the lower courts’ decisions will stifle clean energy generation, Environment & Energy Daily quoted Verrilli arguing, “both courts went out of their way to emphasize that their pre-emption decisions were limited to the specific circumstances of the New Jersey and Maryland programs.”

H. Sterling Burnett, Ph.D., ([email protected]) is the managing editor of Environment & Climate News.