N.Y., Ill. subsidy critics say new FERC order boosts their fight

Source: Ellen M. Gilmer, E&E News reporter • Posted: Saturday, July 7, 2018

Critics of nuclear subsidies in New York and Illinois are using a recent Federal Energy Regulatory Commission order as ammunition in their fight against the state policies.

The Electric Power Supply Association and other challengers on Tuesday told two federal courts that a contentious new FERC order on capacity market reform in the PJM Interconnection region bolsters their position that “zero-emission credits” favoring nuclear energy are unlawful.

FERC’s 3-2 decision, issued Friday night, concluded that PJM’s tariff is unjust and unreasonable because it doesn’t protect the region’s wholesale capacity market from state policies that boost renewables and nuclear power (Energywire, July 2).

EPSA and competing electric generators say that argument supports their fight against the ZEC programs in New York and Illinois. They urged the 2nd U.S. Circuit Court of Appeals and the 7th U.S. Circuit Court of Appeals — which are hearing the challenges to the state laws — to take note of FERC’s new order.

ZEC programs and similar out-of-market support are “requiring FERC to retool its capacity markets,” the identical court filings say. “Two years in, FERC is still searching for a capacity market fix, and has not even started mitigating the harm to the energy market.”

“This disruption of FERC, PJM, and the whole energy market is exactly why states are preempted from meddling with the wholesale market,” Munger, Tolles & Olson LLP attorney Donald Verrilli, representing the ZEC challengers, told the courts.

But when addressing the ZEC programs head on, FERC has defended them. In an amicus brief in the 7th Circuit case in May, the agency wrote that Illinois’ policy is well within the state’s legal authority because it serves state-level environmental goals (Energywire, May 30).

Verrilli wrote Tuesday that FERC’s market analysis in the amicus brief is refuted by the commission’s PJM order.

EPSA, Dynegy Inc., NRG Energy Inc. and other competing generators have long opposed nuclear credits in New York, Illinois and other states considering the policies, saying they amount to political handouts that tread on FERC’s turf. State policymakers maintain that they are acting within their authority to compensate nuclear generators for the carbon-free attributes of their power.