Power association says FERC should reject zombie CPV contracts

The Electric Power Supply Association (EPSA) told the Federal Energy Regulatory Commission that it should not accept power contracts filed by CPV Shore LLC and CPV Maryland LLC because federal courts have essentially tossed those contracts.

EPSA’s June 27 arguments are related to the fact that the contracts, by CPV Shore in New Jersey and CPV Maryland in Maryland, were arrived at under state regulatory programs that have, so far, been invalidated by federal courts. The contracts cover power from two gas-fired, combined-cycle projects being pursued by these Competitive Power Ventures affiliates.

CPV Shore has filed with the commission Standard Offer Capacity Agreements (SOCAs) with various New Jersey electric distribution companies and CPV Maryland has filed contracts for differences (CfDs) with various Maryland electric distribution companies.

“CPV’s filings represent an entirely improper attempt to end run decisions of federal courts invalidating the Voided Contracts and unilaterally to impose the terms of those contracts on the EDCs and, indeed, other participants in the organized markets administered by PJM Interconnection, L.L.C. (‘PJM’),” said EPSA in its June 27 arguments.

The “Voided Contracts” have been invalidated by two federal district courts, which properly recognized them as the products of unlawful state efforts to usurp the commission’s exclusive jurisdiction over rates, terms and conditions for wholesale sales, EPSA contended.

In affirming one of those decisions, the U.S. Court of Appeals for the Fourth Circuit struck down the Maryland Public Service Commission’s order requiring the Maryland EDCs to enter into the CfDs, finding that the order “strikes at the heart of [the Commission]’s statutory power to establish rates for the sale of electric energy in interstate commerce by adopting terms and prices set by Maryland, not those sanctioned by FERC,” and “presents a direct and transparent impediment to the functioning of the PJM markets, and is therefore preempted.” While the appeal of the other district court ruling remains pending, the U.S. Court of Appeals for the Third Circuit has denied CPV’s motion for stay of the judgment, and the New Jersey EDCs have since exercised their right to terminate the SOCAs, EPSA noted.

“In light of the federal court proceedings with respect to the contracts at issue here, it was wholly improper for CPV to turn around and attempt to have the Commission breathe new life into these dead contracts,” EPSA wrote. “It is particularly vital that the Commission reject the CPV Filings in light of the mischief that will follow if it does otherwise. CPV would undoubtedly claim that Commission acceptance of the Voided Contracts for filing, no matter how carefully qualified, somehow makes those nullities enforceable against the EDCs, notwithstanding the federal courts’ carefully reasoned and lawful decisions to the contrary, and the courts, as well as the parties, will then be forced to expend further time and resources sending these zombies back to their graves.”

EPSA is the national trade association representing leading competitive power suppliers, including generators and marketers.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.