Experts debate: SCOTUS, technology and the future of energy

A panel of industry experts gathered in Nashville to debate the impact of Supreme Court decisions the way energy providers deliver their products to their customers as part of the annual summer meeting of the National Association of Regulatory Utility Commissioners (NARUC).

The debate centered around three landmark Supreme Court cases – Federal Energy Regulatory Commission (FERC) v. Electric Power Supply Association, Oneok v. Learjet, and Hughes v. Talen Energy Marketing, LLC – that have all impacted the energy sector.

Under FERC v. Electric Power Supply Association, the court ruled that FERC had the authority to regulate demand response, while Oneok v. Learjet saw the court find that the Natural Gas Act preempts a claim when that claim falls within a preempted field enumerated by judicial precedent.

In the third case, Hughes v. Talen Energy Marketing, LLC, the court invalidated a Maryland program to promote construction of new natural gas capacity by guaranteeing new generating capacity. The court found that the Maryland program is preempted by the Federal Power Act because of its intent to disregard the interstate wholesale rate required by FERC.

“There’s been a big political narrative around these cases that places this idea that these cases represent a power-grab by FERC,” Allison Clements, director of the Sustainable FERC Project and the Natural Resources Defense Council, said. “While I agree there is a lot of uncertainty before us at this ever-changing time, I don’t think that narrative is fully accurate. I think these cases are emblematic of stress being placed on an 80 year-old jurisdictional statute at a time when the law is not able to keep up with the changing technology.”

Sarah Novosel, senior vice president for government affairs and managing counsel at Calpine, however, countered Clements’ argument, stating that the cases, particularly the Hughes case, had vague terminology that caused problems for energy regulators and consumers alike.

“I think there’s something in the Hughes case there for everyone,” Novosel said. “On one hand the court states can take action so long as it’s untethered to the wholesale market…What exactly does that mean? Arguably a lot is tethered to the wholesale market.”

William Hogan, professor at the Harvard Kennedy School of Government, while voicing his support for the future of natural gas, added that another concern is using too much renewable technology in its current form.

“Shale was a big surprise,” Hogan said. “While that’s promising to the consumer, we have a technology problem when it comes to certain forms of clean energy. Simply put, many of those options are prohibitively too expensive for wide-use today.”

In addition to the expense – the panel pointed to New York’s attempts to bring in Canadian hydropower and utilize offshore drilling – an additional hindrance is that markets aren’t structured to meet goals set forth by state to reduce carbon footprints.

States taking such steps, like Illinois, which is attempting to subsidize nuclear-type initiatives, will undermine the wholesale market, the panel, which also included Michael Haugh, assistant director of analytics for the Ohio Consumer’s Council, and Jay Morrison, vice president of regulatory issues for the National Rural Electric Cooperative Association, said.

While there aren’t any current answers, the panel said, it encouraged the wholesale market to come together to help pricing issues.