Commerce Clause and Supremacy Clause Challenge to Nuclear Zero Emission Credit Program
Electric Power Supply Association v. Star
Recent Developments: EPSA and four merchant generators filed a complaint in February 2017. A separate complaint making largely the same legal claims was filed a small group of Illinois businesses and residents and one local government. In March, the plaintiffs filed for a preliminary injunction.
In December 2016, the Illinois Legislature passed a sweeping energy bill that includes a zero-emission credit (ZEC) program. Modeled after New York’s ZEC mandate that was finalized by that state’s Public Service Commission in August 2016, the Illinois law will award qualified nuclear generators one ZEC for each MWh generated and will require utilities to purchase a specified number of ZECs. ZEC prices are pegged to the federal government’s measure of the social cost of carbon and may be adjusted downward by regulators based on forecasted and actual wholesale capacity prices.
The law tasks the Illinois Power Agency with conducting a procurement for ZECs by May 2017. The IPA must choose facilities “reasonably capable of generating cost-effective ZECs” and IPA must account for the environmental benefits “preserved by the procurement” and consider the recommendations of a state report that touts the benefits of preserving in-state nuclear plants. The law does not identify geographic criteria but instead requires the IPA to account for the effects on carbon dioxide emissions that result from electricity consumed in Illinois and other air pollutants that affect Illinois.
In February 2017, several plaintiffs that filed suit in federal district court in New York against that state’s ZEC program filed a nearly identical complaint in federal court in Illinois. The plaintiffs assert that the states’ programs are field preempted because the required payments for ZECs “directly alter” and “effectively replace” the price generated by FERC-regulated auctions. Moreover, they argue that ZEC revenue will “artificially suppress” and “disrupt” FERC-jurisdictional market prices and is therefore also conflict preempted.
Finally, the generators claim that the law is discriminatory under the dormant Commerce Clause because it will benefit only in-state plants, a result motivated by “political reasons.” Although the IPA had not yet conducted the procurement when plaintiffs filed suit, they allege that the process is a “sham.” They point to a statement by the Governor indicating ZECs will benefit two in-state nuclear plants owned by Exelon.
Complaint (Feb. 14, 2017)
Complaint of Illinois residents and businesses (Feb. 14, 2017) (two Illinois businesses, one town and a handful of residents filed a second complaint that includes identical preemption and dormant Commerce Clause claims and adds a claim under the 14th Amendment)
Plaintiff Generators’ Motion for a Preliminary Injunction (Mar. 31, 2017)
• Economic Consultant’s Report in Support of Preliminary Injunction (Mar. 31, 2017)
Plaintiff Residents and Businesses Motion for a Preliminary Injunction (Mar. 31, 2017)
State Defendants’ Motion to Dismiss (Apr 10, 2017)
Intervenor-Defendant Exelon’s Motion to Dismiss (Apr 10, 2017)
NRDC’s Amicus Brief in Support of Motions to Dismiss (Apr 12, 2017)
NGOs’ Amicus Brief in Support of Motions to Dismiss (Apr. 12, 2017)
American Wind Energy Association (AWEA) Amicus in Support of Neither Party (Apr. 12, 2017) (AWEA’s brief argues that ZECs are distinguishable from renewable energy credits (RECs).)
FERC Complaint Proceeding about PJM Capacity Market Rules
Amended complaint (Jan. 9, 2017)
Exelon’s Answer (Jan. 30, 2017)
Affidavit of Exelon’s Consultant, Robert Willig
Monitoring Analytics’ Answer (Jan. 30, 2017) (Monitoring Analytics is the PJM market monitor)
PJM’s Answer (Jan. 30, 2017)
NEI’s Comments (Jan. 30, 2017)
Environmental Advocates’ Answer (Jan. 30, 2017)
Load Group’s Answer (Jan. 30, 2017)
Illinois Commerce Commission Answer (Feb. 3, 2017)