January 13, 2020

FERC On Legal Limb With State Clean Energy Subsidy Order ($)

Nicholas Institute for Environmental Policy Solutions

The Federal Energy Regulatory Commission has opened itself up to legal challenges on multiple fronts with its recent order that would restrict participation by resources receiving state policy support in wholesale electricity auctions run by the nation's largest regional grid operator, reports Law360.

FERC issued a Dec. 19 order requiring that resources benefiting from state policy preferences submit bids above a minimum price floor to participate in electricity capacity auctions run by PJM Interconnection LLC, which oversees the grid in 13 Mid-Atlantic and Midwest states and Washington, D.C.

Jennifer Chen, senior counsel for federal energy policy at Duke University's Nicholas Institute for Environmental Policy Solutions, noted that given how broadly the order applies to state policies, it "might be upsetting the balance of power between states and federal entities such as FERC." While at the same time, the order’s differing treatment of existing and newer resources could be challenged on the basis of undue discrimination, which FERC cannot do under the Federal Power Act.

"We can definitely see a different treatment of existing versus newer resources," Chen said.

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