Cpv Maryland v. Ppl Energyplus

Questions presented

SCOTUS records, cert granted 19 Oct 2015

1. Under the Federal Power Act, 16 U.S.C. §§824 et seq., States retain authority over electricity and capacity purchases by local utilities. They cannot, however, impose the rates for those purchases; only the Federal Energy Regulatory Commission (FERC) can regulate interstate wholesale rates. Seeking a new power plant, Maryland conducted a competitive procurement and directed its local utilities to enter into long-term contracts with the successful bidder, providing the stable revenue needed to induce the developer's investment and support the costs of construction. Under those contracts, if the developer's accepted bid price exceeds what the developer earns by selling the plant's capacity in the FERC-supervised auction, the utility pays the difference to the developer; if auction revenue exceeds the bid price, the developer rebates the difference to the utility. The payment or rebate is passed on to retail ratepayers.
2. Where, as a result of a state-directed procurement, the contract price to build and operate a power plant is the developer's bid price, and may result in payments beyond what the developer earns selling the plant's capacity in the FERC-supervised auction, is the program "field preempted" as a State's attempt to set interstate wholesale rates?
3. Is a state-directed contract to support construction of a power plant "conflict preempted" because its long-term pricing structure provides incentives different from the incentives provided by prices generated in the FERC-supervised yearly capacity auction?

Opinion summary

Etalia.ai summary of the majority opinion

The case involved a dispute over Maryland's program to incentivize the construction of new power plants by guaranteeing certain payments to developers, which was challenged by PPL EnergyPlus and other energy companies. The Supreme Court had to determine whether this state initiative intruded upon the Federal Energy Regulatory Commission’s (FERC) exclusive authority under the Federal Power Act (FPA) to regulate wholesale electricity rates. The court ruled that Maryland's program impermissibly interfered with FERC’s jurisdiction because it effectively set wholesale prices for capacity sales in interstate markets, thus undermining federal regulatory schemes designed to maintain fair competition and market stability across states.