Maryland utility regulators and a power plant developer they offered subsidies both expressed disappointment that the Supreme Court ruled against them Monday, but disagreed over what that means for future state efforts to encourage power plant construction.
The court decided Maryland overstepped its authority when the Public Service Commission ordered state utilities to buy electricity generated at a $775 million natural gas plant that Silver Spring-based Competitive Power Ventures is building in Charles County. The state's actions stepped into the territory of federal regulators, the court ruled.
While the high court made that position clear in its unanimous decision, the ruling did not set a precedent that would be applicable in other states trying to increase electric grid capacity or spur renewable energy projects, argued Braith Kelly, senior vice president for external affairs for Competitive Power Ventures.
"They went a long way toward defining what states can do, but there are a lot of other issues surrounding this," Kelly said. "This ruling was extremely narrow. It didn't deal with a lot of other issues that remain in question."
It did, at least, preserve some state powers, though, Maryland Public Service Commission Chairman W. Kevin Hughes said in a statement.
"While the Maryland Commission is, of course, disappointed that the Court found the form of our arrangement was impermissible, we are pleased the decision reaffirms the right of states to procure new generation," he said. "We think the Court's opinion provides some clarity for how states can encourage new, clean and renewable generation going forward."
The commission was looking to ensure the state would have enough electricity for decades to come when in 2012 it ordered utilities, including Baltimore Gas and Electric Co., to buy power from the plant. It had solicited bids for power generation and offered a long-term contract for the chosen developer to sell electricity at a guaranteed price. Ratepayers would have been on the hook for any difference if market prices fell below that guarantee.
In writing for the court, Justice Ruth Bader Ginsburg noted that the court was not preventing states from taking measures to encourage development of new or more environmentally friendly power plants. That could include tax incentives, land grants, direct subsidies or other actions that don't intrude on federal authority, she said.
However, the court ruled, only the Federal Energy Regulatory Commission has jurisdiction over pricing in wholesale energy markets.
"Nothing in this opinion should be read to foreclose Maryland and other states from encouraging production of new or clean generation through measures untethered to a generator's wholesale market participation," she said.
Regardless of the decision, the Competitive Power Ventures project, known as the Saint Charles Energy Center, is set to open by the end of the year, Kelly said. It will have a 725-megawatt capacity, enough to power 700,000 homes.