Court validates PPL beliefs on state subsidies for new power plants
September 15, 2014 | By
Barbara Vergetis Lundin
Last week, the U.S. Court of Appeals for the Third Circuit came to a unanimous decision that a New Jersey law promoting construction of new power plants by subsidizing development of new generation in the state is invalid because it oversteps the state's regulatory authority. The three-judge panel ruled that the federal government has exclusive control over interstate rates for capacity payments to electric power generators. The New Jersey law, which enabled selected generators to receive preferential capacity prices, intruded into an area of regulation reserved for the Federal Energy Regulatory Commission under the Federal Power Act. The decision upholds a New Jersey District Court decision in a lawsuit filed by PPL EnergyPlus and other competitive electricity suppliers after the legislation was enacted in 2011. In a similar case earlier this year, the U.S. Court of Appeals for the Fourth Circuit upheld a Maryland District Court decision that the Maryland Public Service Commission intruded on exclusive federal authority to regulate interstate wholesale electricity sales when it issued an order subsidizing the development of new natural gas-fired generation. PPL companies have held firm to the belief that state subsidies for power plant development ultimately result in higher electricity prices for consumers, create barriers to future investment in electric power development, and unnecessarily shift financial risk from developers to consumers. "These two important federal appeals court decisions uphold the integrity of competitive electricity markets, and protect consumers who would have ended up bearing the financial risk of power plant construction," said Robert J. Grey, PPL Corporation executive vice president, general counsel and secretary. PPL contends that well-structured and properly regulated competitive markets provide accurate price signals to developers. While not perfect, the market model in the PJM Interconnection is providing signals that have resulted in the development of new natural gas-fired power plants in the region without the need for state subsidies like the New Jersey law at issue in this case, according to PPL. For more: © 2014 FierceMarkets, a division of Questex Media Group LLC. All rights reserved. |