Appeals court says Maryland power-plant deal 'is not permissible'

A U.S. Court of Appeals panel has upheld a decision that Maryland strayed into federal-only territory when it tried to jump start construction of a power plant with subsidies.

The Maryland Public Service Commission, concerned about reliability problems if more power plants aren't built, struck a deal for ratepayers to subsidize a natural gas-fired facility in Waldorf any time the wholesale price for its electricity fell below a certain level. The plant was slated to open next year.

Competing energy companies sued. A U.S. District Court judge ruled in October that the arrangement was unconstitutional because wholesale energy markets are the purview of the Federal Energy Regulatory Commission.

A three-judge panel from the U.S. Court of Appeals in Richmond, Va. agreed on Monday.

"Maryland has sought to achieve through the backdoor of its own regulatory process what it could not achieve through the front door of FERC proceedings," they said in their ruling. "Circumventing and displacing federal rules in this fashion is not permissible."

The Public Service Commission said in a statement that it is working with its legal team "to determine our next steps."

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