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High court will decide state power plant subsidies row

“The New Jersey and Maryland programs tie guaranteed payments under state law to the wholesale rate under the PJM auction and to the generators’ participating in and clearing the PJM auction,” the brief stated. “State-selected generators can then bid into the auction market at a price that does not accurately reflect their costs, thereby disrupting the auction’s price signals that are designed to incentivize new generation.” ...The cases are Hughes et al. v. PPL EnergyPlus LLC et al., case number 14-614 and CPV Maryland LLC v. PPL EnergyPlus LLC et al., case number 14-623, in the Supreme Court of the United States.

The U.S. Supreme Court on Monday agreed to consider whether subsidies offered by New Jersey and Maryland for new power plant construction usurped the Federal Energy Regulatory Commission's authority over wholesale electricity markets, taking yet another stab at clarifying the state-federal jurisdictional line over the nation's electricity markets.

The high court accepted petitions for writ of ceritorari filed by Maryland and New Jersey regulators to review rulings by the Third and Fourth circuits that their state programs offering electricity pricing incentives for developers to build new, gas-fired power plants usurp FERC's authority over wholesale electric markets run by grid operator PJM Interconnection LLC. The court also accepted the petition of units of generation developer Competitive Power Ventures Holdings LLC and Hess Corp. that benefited from New Jersey's and Maryland's incentives.

The Supreme Court took the case despite the contention from the U.S. solicitor general's office that the appeals courts correctly nixed the programs.

Electricity providers including PPL EnergyPlus LLC claimed the incentives would artificially depress wholesale... more [truncated due to possible copyright]  

The U.S. Supreme Court on Monday agreed to consider whether subsidies offered by New Jersey and Maryland for new power plant construction usurped the Federal Energy Regulatory Commission's authority over wholesale electricity markets, taking yet another stab at clarifying the state-federal jurisdictional line over the nation's electricity markets.

The high court accepted petitions for writ of ceritorari filed by Maryland and New Jersey regulators to review rulings by the Third and Fourth circuits that their state programs offering electricity pricing incentives for developers to build new, gas-fired power plants usurp FERC's authority over wholesale electric markets run by grid operator PJM Interconnection LLC. The court also accepted the petition of units of generation developer Competitive Power Ventures Holdings LLC and Hess Corp. that benefited from New Jersey's and Maryland's incentives.

The Supreme Court took the case despite the contention from the U.S. solicitor general's office that the appeals courts correctly nixed the programs.

Electricity providers including PPL EnergyPlus LLC claimed the incentives would artificially depress wholesale prices that are regulated by FERC. Federal district courts in New Jersey and Maryland agreed — and were backed last year by the Third and Fourth circuits respectively.

The New Jersey Board of Public Utilities, for one, is arguing that its program is aimed at providing an incentive for intrastate power generators to add capacity without directly regulating wholesale electricity sales, and that the FPA's dual-sovereignty setup gives the state the authority to regulate electric generation development.

But the respondents claim the case is not about states’ rights but actually hinges on the much narrower issue of whether states can provide incentives for power generation by setting their own rates for wholesale transactions.

Indeed, the appeals courts indicated that states could still offer other incentives for new generation development.

The Supreme Court asked the OSG to weigh in on the dispute in March. In a Sept. 16 brief, the OSG said the Third and Fourth circuits correctly held that the Maryland and New Jersey programs were preempted under the Federal Power Act, and that the rulings don't conflict with any other circuits.

“The New Jersey and Maryland programs tie guaranteed payments under state law to the wholesale rate under the PJM auction and to the generators’ participating in and clearing the PJM auction,” the brief stated. “State-selected generators can then bid into the auction market at a price that does not accurately reflect their costs, thereby disrupting the auction’s price signals that are designed to incentivize new generation.”

The parties couldn't immediately be reached for comment Monday.

The Supreme Court has shown an increasing interest in settling turf battles between FERC and the states.  Last week, justices heard oral arguments over the legality of FERC's controversial rule requiring consumers be paid for using less power during high-demand period, which the D.C. Circuit concluded usurps state authority over retail electric markets.

In April, the high court held that state-law claims in multidistrict litigation against natural gas companies over price-fixing in the 2000s aren't preempted by the Natural Gas Act, backing a Ninth Circuit ruling which held that Congress did not give FERC the right to oversee first sales or retail sales of natural gas and said the NGA provided "a regulatory role for the states" in the production of natural gas.

The BPU is represented by New Jersey Acting Attorney General John J. Hoffman, Richard F. Engel of the New Jersey Department of Law & Public Safety and Lisa J. Morelli, Alex Moreau and Jennifer S. Hsia.

The Maryland Public Service Commission is represented by Scott H. Strauss of Spiegel & McDiarmid LLP.

The respondents are represented by Paul D. Clement, Erin E. Murphy and Candice Wong of Bancroft PLLC, Philip J. Passante of Pepco Holdings Inc., David Musselman of Essential Power LLC, Jesse A. Dillon of PPL Services Corp., David L. Meyer of Morrison & Foerster LLP and Sarah G. Novosel of Calpine Corp.

CPV is represented by Clifton S. Elgarten, Larry F. Eisenstat, Richard Lehfeldt and Jennifer N. Waters of Crowell & Moring LLP.

The Hess subsidiary is represented by Richard Zuckerman of Dentons.

The cases are Hughes et al. v. PPL EnergyPlus LLC et al., case number 14-614 and CPV Maryland LLC v. PPL EnergyPlus LLC et al., case number 14-623, in the Supreme Court of the United States.


Source: http://www.law360.com/energ...

OCT 19 2015
http://www.windaction.org/posts/43606-high-court-will-decide-state-power-plant-subsidies-row
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