Energy attorney Jennifer Mersing was quoted in POWER magazine in an article titled “Nuclear Subsidy Dispute Now Rests with FERC, Competitive Generators Say,” published April 16, 2019, and in E&E News’ Energywire in an article titled “The fight’s not over yet on state nuclear credits,” published April 16, 2019. The articles discuss a recent Supreme Court decision to not review appellate court rulings upholding state nuclear subsidies, called zero-emission credit (ZEC) policies, in Illinois and New York.
The Supreme Court had previously struck down a Maryland generation subsidy program, finding that the Maryland program effectively established a wholesale capacity price and therefore its program was preempted by the Federal Power Act (which grants the Federal Energy Regulatory Commission (FERC) authority over wholesale markets). The Seventh Circuit and the Second Circuit drew a distinction between the Maryland program and the ZEC programs in Illinois and New York, respectively, finding that (unlike in the Maryland program struck down by the Supreme Court), the nuclear subsidy programs do not require the subsidized generator’s participation in the wholesale markets (even though such participation is likely to occur).
“Under the Second Circuit’s and the Seventh Circuit’s narrow reading of the Supreme Court’s decision in Hughes, states would be allowed to subsidize generation of their choosing, as long as the selected subsidy program only has an indirect (even if expected) impact on wholesale power market,” Mersing said. “But, FERC still has the authority to change wholesale market power rules to mitigate the market effect of state generation subsidy programs.”