The Court’s previous decision on electricity regulation strikes the right balance between state and FERC authority in restructured power markets.
The heart of EPSA’s ZEC petitions is its claim that the Supreme Court’s 2016 decision Hughes v. Talen provides states with too much authority to affect interstate power markets. EPSA urges the Court to effectively overturn Hughes and instruct lower courts to invalidate state policies that pay generators in connection with their energy production. If the Supreme Court were to accept EPSA’s view, it would set the stage for lawsuits against clean energy programs that reward renewable facilities for their emission-free energy generation, including renewable portfolio standards in nearly 30 states.
The Supreme Court should reject EPSA’s petition. The Court’s carefully crafted legal test in Hughes for preempting state energy policies reflects modern power markets and respects long-standing state authority over utilities, electric generators, and environmental protection. As this article explains, the Court’s legal test correctly focuses on FERC’s rate-setting mechanism. Hughes targets only state policies that “operate within” wholesale auctions and leaves intact state authority to enact policies that give generators out-of-market revenue.