On Tuesday, April 19, a unanimous Supreme Court ruled that Maryland's incentive program, which subsidized the participation of a new power plant in the PJM Interconnection (PJM) wholesale energy market, was preempted by the Federal Power Act.
The Maryland incentive program was put in place to encourage new in-state generation proposed by CPV Maryland LLC (CPV) by contractually committing Maryland's regulated load serving entities (LSEs) to guarantee a fixed 20-year revenue stream for CPV. The revenue stream was assured through a "contract for differences," under which the new generator would pay or be paid the difference between the contract price and the price the generator received in the FERC-regulated wholesale power market.
Justice Ginsburg's majority opinion, joined by six Justices, held that "Maryland's program invades FERC's regulatory turf" by impermissibly infringing on the FERC "exclusive jurisdiction over 'rates and charges . . . received . . . for or in connection with' interstate wholesale rates."1 Elaborating, the Court noted that "FERC has approved the PJM capacity auction as the sole ratesetting mechanism for sales of capacity to PJM," and that Maryland's efforts to set a different rate for CPV impermissibly "intrude on FERC's authority over interstate wholesale rates."2
The Court was deliberate in distinguishing the facts and limiting its rationale, observing that it "need not and do[es] not address the permissibility of various other measures States might employ to encourage development of new or clean generation, including tax incentives, land grants, direct subsidies, construction of state-owned generation facilities, or re-regulation of the energy sector."3 Further, the Court clarified that it was not calling into question contracts for differences that are entered into voluntarily by LSEs without the compulsory state action that existed in Maryland. Justice Sotomayor wrote a concurring opinion also stressing the limited nature of the Court's ruling and emphasizing that the Maryland program impermissibly infringed on the existing federal-state relationship envisioned by the Federal Power Act.4 Justice Thomas wrote a concurring opinion, joining in the opinion of the Court" only to the extent that it rests on the text and structure of the Federal Power Act" and not on "principles of implied pre-emption."5
While this ruling involves widely different circumstances and regulatory schemes than the Court's January decision in FERC v. Electric Power Supply Association, the two cases together help clarify the evolving roles of state and federal regulators in the development and management of state public energy policy and their intersection with regulated wholesale power markets.
 Hughes v. Talen Energy Marketing LLC, 578 U.S. ___, 12 (2016) (citing Federal Power Act Section 205, 16 U.S.C. §824(d)).
 Id. at 13.
 Id. at 15.
 Hughes v. Talen Energy Marketing LLC, 578 U.S. ___ (Sotomayor, J., concurring).
 Hughes v. Talen Energy Marketing LLC, 578 U.S. ___ (Thomas, J., concurring in part).
Paul Belval will be co-presenting a webinar, "Developing and Financing Wind Energy Projects: Contract Provisions, Protecting Developer and Landowner Interests," for Strafford.
On June 13, Beth Barton and Harold Blinderman spoke at the Connecticut Business & Industry Association (CBIA) 2019 Energy & Environment Conference in Cromwell, CT.
On June 13, Sebastian Lombardi will be moderating a panel, "Northeast Updates on Tackling Fuel Security," at the 2019 Energy Bar Association (EBA) Northeast Chapter Annual Meeting in Washington, DC.
Alex Judd will be moderating a panel, "Future Cities: Building Projects from the Green Up," at the 2019 New England Energy Conference & Exposition (NEECE), a joint conference of the Northeast Energy and Commerce Association and the Connecticut Power and Energy Society being held at the Mystic Marriott in Groton, CT.
On April 4, Joe Fagan will be speaking at Natural Gas & Pipeline Issues, a 50th Anniversary Master Class presented by the Environmental Law Institute (ELI) and held in Washington, D.C.
Josh Cohen, chair of Day Pitney's Bankruptcy and Restructuring practice group was quoted extensively in an article, "FERC Rebuke Won't Be Last Word In PG&E Power Deals Fight," published by Law360.
David Doot, Steven Cash and James Blackburn, IV authored an article, "Risk and Opportunity with the Industrial Internet of Things," which was published in the July-August 2019 issue of The Journal of Robotics, Artificial Intelligence & Law.
Day Pitney Press Release
Partners Josh Cohen and Dave Doot were quoted in an analysis article, "PG&E's Ch. 11 Brings Rift With FERC Over Power Deals," published by Law360.
Day Pitney associate Alexander W. Judd has been elected to serve as Chair of the Energy, Public Utility and Communications Law Section of the Connecticut Bar Association (CBA).