PPL, EPSA call decision victory for competitive markets

The Maryland Public Service Commission (PSC) is considering its next step while PPL (NYSE:PPL) and the Electric Power Supply Association (EPSA) both applauded a Sept. 30 federal court ruling against a PSC contract arrangement for a planned natural gas plant.

The 150-page ruling by U.S. District Judge Marvin Garbis said it was improper for the PSC to force in-state utilities to enter into long-term contracts with a new 660-MW combined-cycle power plant planned by Competitive Power Ventures (CPV) in Charles County, Md.

For its part, CPV said Oct. 2 that it was still reviewing the ruling and assessing its impact.

While Maryland can regulate the development and location of proposed generating units in the state, it cannot intrude upon FERC’s exclusive jurisdiction to set wholesale energy and capacity prices, the judge said in the ruling.

“The Commission is reviewing Judge Garbis’ ruling and has no comment at this time,” a PSC spokesperson said in an email response to GenerationHub on Oct. 1.

“We are disappointed by the Judge’s decision,” said a spokesperson for Gov. Martin O’Malley. “We believe States play an important role in planning for their energy future, and we will continue to take all necessary steps to preserve Maryland’s right to do so,” the spokesperson said. 

The Maryland court case, and a similar one in New Jersey, are being watched closely by non-utility generators who did not want to see deregulated states seeming to subsidize certain power plants.

Ironically, another planned CPV gas plant is at the center of the disputed New Jersey program for in-state generation.

“EPSA is heartened by the decision issued by the US District Court in Maryland,” said EPSA President and CEO John Shelk. The EPSA official called the lengthy memorandum decision well-researched and well-reasoned. “EPSA is hopeful that this precedent will be followed elsewhere,” Shelk said.

“[P]rivate capital cannot be put at risk as organized competitive wholesale markets and state restructuring require if states can undermine FERC-regulated markets under the guise of promoting some state policy,” Shelk said. “The focus should be on making wholesale markets work better for everyone, not singling out a few for ratepayer subsidies as the prior Maryland commission attempted here,” Shelk added.

PPL, one of the lead plaintiffs in the case, also praised the ruling. PPL Executive Vice President, General Counsel and Secretary Robert Grey said the decision upholds the integrity of competitive generation markets.

PPL has long argued that state programs that subsidize power plant development ultimately wind up costing consumers more, create barriers to future investment and unnecessarily shift the financial risk of new construction from developers to ratepayers, the company said in a statement.

“Because of competitive markets, gas-fired generation is being built in PJM without state subsidies, and there are ample supply resources in the wholesale electricity market to meet the state’s and region’s energy needs,” PPL said Oct. 1.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.