On Friday, New York PSC commissioners and intervenor Exelon filed reply briefs in support of their motions to dismiss a complaint that seeks to invalidate the New York’s Zero Emission Credit (ZEC) program for nuclear generators. All of the briefs authorized by the federal district court hearing the case have now been filed. The judge is not under any deadline to rule on motions to dismiss, but past cases suggest that a ruling in the spring is plausible.
The PSC and Exelon focus their replies on plaintiffs’ field preemption claims and in particular rebut the argument that there is a legally meaningful distinction between ZECs and Renewable Energy Credits (RECs). Plaintiffs claim that RECs, which are vital to renewable energy laws in approximately thirty states, are not preempted because, unlike ZECs, they are not priced administratively and are not conditioned on a determination that a generator is earning insufficient revenue from wholesale markets. The PSC and Exelon reply by pointing to FERC orders that disclaim jurisdiction over RECs sold independently of their associated energy and highlighting that ZECs are likewise sold separately from power or capacity. Moreover, states created RECs for the same reason that New York created ZECs — to provide generators with revenue that supplements energy and capacity sales. The state defendants and Exelon assert that both RECs and ZECs compensate generators for environmental attributes, which are not accounted for in FERC-regulated markets and fall squarely within the state’s jurisdiction.
The state defendants and Exelon also respond to conflict preemption claims. Earlier this month, one of the plaintiffs filed a separate complaint at FERC, requesting that the Commission order the NYISO to amend its capacity market rules to account for New York’s subsidies that “interfere with economic signals . . . [and] represent an existential threat to the organized wholesale markets.” In their reply in federal court, the state defendants point to this complaint before FERC as evidence that plaintiffs’ claim that ZECs interfere with the FERC-regulated capacity market must be dismissed; a federal court “cannot find conflict when FERC, not New York, will decide how subsidized resources participate in wholesale auctions and affect resulting prices.” The PSC commissioners also reiterate their defense that plaintiffs have no right under the Federal Power Act to bring preemption claims to federal court. Both the state defendants and Exelon also respond to plaintiffs’ dormant Commerce Clause challenge.
All of the briefs referenced in this summary, as well as a complaint filed at FERC by generators about Illinois’ ZEC law and an amicus brief filed by the Environmental Defense Fund, are available on the New York page.