Term: 2015
Docket: 14-614
Hughes v. Ppl Energyplus
- Pro
14-614 HUGHES V. TALEN ENERGY MARKETING DECISION BELOW: 753 F.3d 467 CONSOLIDATED WITH 14-623 FOR ONE HOUR ORAL ARGUMENT. CERT. GRANTED 10/19/2015 QUESTION PRESENTED: The Federal Power Act (FPA) splits authority among states, utilities, and the Federal Energy Regulatory Commission (FERC). States regulate generation facilities and retail utility power purchases, but may not set wholesale rates. Wholesale energy sellers set their own rates. FERC has exclusive jurisdiction to review them and determine their legality. In much of the country, independent system operators run multi-state transmission systems and wholesale energy markets. PJM Interconnection LLC (PJM), an operator whose region includes Maryland, procures by auction the generation capacity it expects the region to need for a one-year period beginning three years later. Looking beyond that horizon and concerned that facility retirements could degrade reliability, Maryland decided it needed new generation. It solicited offers, and required retail utilities to accept the winning bid. The resulting contracts obligate the bidder to build a plant and make it available to PJM for twenty years, while the retail utilities pay (or receive) the difference between the contract and PJM auction prices. The Fourth Circuit held Maryland's actions field and conflict preempted-contrary to the FPA's structure and decisions of this Court, the D.C. Circuit, and FERC. The questions presented are: 1. When a seller offers to build generation and sell wholesale power on a fixed rate contract basis, does the FPA field-preempt a state order directing retail utilities to enter into the contract? 2. Does FERC's acceptance of an annual regional capacity auction preempt states from requiring retail utilities to contract at fixed rates with sellers who are willing to commit to sell into the auction on a long-term basis? LOWER COURT CASE NUMBER: 13-2419, 13-2424
In the 2015 case Hughes v. PPL EnergyPlus, the US Supreme Court ruled that a Maryland program which incentivized new power plant construction was preempted by federal law. The state of Maryland had created a policy to encourage development of new in-state power plants, guaranteeing these plants income through contracts for differences (CfDs). However, several existing electricity providers argued this interfered with federally-regulated wholesale electricity rates. The court agreed and held that while states have authority over power generation within their borders, they cannot intrude on the Federal Energy Regulatory Commission's jurisdiction over interstate wholesale rates. Therefore, although states can regulate production within their boundaries under the Federal Power Act (FPA), they cannot use measures tied to participation in FERC-regulated markets as it disrupts those market’s price signals.
In the dissenting opinion for Hughes v. PPL EnergyPlus, Justice Thomas argued that the Federal Power Act does not preempt Maryland's program because it doesn't regulate wholesale sales of electricity. He contended that while federal law regulates prices in those markets, states are free to influence these rates indirectly through their own regulatory measures. The majority’s interpretation would mean any state regulation affecting federal tariffs is pre-empted which he believed was an overreach and could undermine a wide range of state laws affecting energy production and consumption. Furthermore, he disagreed with the majority’s reliance on precedent cases like Mississippi Power & Light Co., arguing they were wrongly decided or misinterpreted by the court.
