U.S. Supreme Court to take up power plant programs in New Jersey, Maryland

The U.S. Supreme Court on Oct. 19 agreed to consider, all in one case with an hour of oral argument, power plant set-aside programs offered by New Jersey and Maryland for new power plant construction.

The main federal issue involved is whether the states usurped the Federal Energy Regulatory Commission’s authority over wholesale electricity markets. The high court accepted petitions for certiorari filed by Maryland and New Jersey regulators to review rulings by the Third and Fourth Circuit Courts of Appeal, which held that the state programs offering electricity pricing incentives for developers to build new in-state plants were a violation of FERC authority. In each of the states, Competitive Power Ventures was the winning bidder with gas-fired projects.

The cases the high court decided to takle up are: Hughes, W. Kevin, et al. v. PPL EnergyPlus, et al.; and CPV Maryland v. PPL EnergyPlus, et al.

Notable is that PPL EnergyPlus was recently taken over by the newly-formed Talen Energy, which said about these cases in its Aug. 12 Form 10-Q quarterly report to the SEC:

New Jersey Capacity Legislation

“In January 2011, New Jersey enacted a law (the Act) that Talen Energy believes would intervene in the wholesale capacity market to create incentives for the development of new, in-state electricity generation facilities even when, under the FERC-approved PJM economic model, such new generation would not be economic.  The Act could depress capacity prices in PJM in the short term, impacting Talen Energy’s revenues, and harm the long-term ability of the PJM capacity market to encourage necessary generation investment throughout PJM.

“In February 2011, Talen Energy subsidiaries and several other companies filed a complaint in U.S. District Court in New Jersey challenging the Act on the grounds that it violates the Supremacy and Commerce clauses of the U.S. Constitution and requesting relief barring implementation. In October 2013, the U.S. District Court in New Jersey issued a decision finding the Act unconstitutional under the Supremacy Clause on the grounds that it infringes upon the FERC’s exclusive authority to regulate the wholesale sale of electricity in interstate commerce. The decision was appealed to the U.S. Court of Appeals for the Third Circuit (Third Circuit) by CPV Power Development, Inc., Hess Newark, LLC and the State of New Jersey (the Appellants). In September 2014, the Third Circuit affirmed the District Court’s decision. In December 2014, the Appellants filed a petition for certiorari before the U.S. Supreme Court. In March 2015, the U.S. Supreme Court requested the U. S. Solicitor General to submit briefs expressing its views as to the issues raised in this case.”

Maryland Capacity Order

“In April 2012, the Maryland Public Service Commission (MD PSC) ordered (Order) three electric utilities in Maryland to enter into long-term contracts to support the construction of new electricity generating facilities in Maryland, the intent of which, Talen Energy believed, was to encourage the construction of new generation even when, under the FERC-approved PJM economic model, such new generation would not be economic,” said the Form 10-Q. “The MD PSC action could depress capacity prices in PJM in the short term, impacting Talen Energy’s revenues, and harm the long-term ability of the PJM capacity market to encourage necessary generation investment throughout PJM.

“In April 2012, Talen Energy subsidiaries and several other companies filed a complaint in U.S. District Court (District Court) in Maryland challenging the Order on the grounds that it violates the Supremacy and Commerce clauses of the U.S. Constitution, and requested declaratory and injunctive relief barring implementation of the Order by the MD PSC Commissioners. In September 2013, the District Court issued a decision finding the order unconstitutional under the Supremacy Clause on the grounds that it infringes upon the FERC’s exclusive authority to regulate the wholesale sale of electricity in interstate commerce. The decision was appealed to the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) by CPV Power Development, Inc. and the State of Maryland (the Appellants).  In June 2014, the Fourth Circuit affirmed the District Court’s opinion and subsequently denied the Appellants’ motion for rehearing. In December 2014, the Appellants filed a petition for certiorari before the U.S. Supreme Court. In March 2015, the U.S. Supreme Court requested the U.S. Solicitor General to submit briefs expressing its views as to the issues raised in this case.”

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.