By Ted Caddell

The Supreme Court announced yesterday that it will rule on two federal-state jurisdictional cases pitting Maryland regulators against FERC.

The court said it would consider orders by the 4th U.S. Circuit Court of Appeals that upheld lower court rulings throwing out contracts in which generation developers won state-issued subsidies to build plants in the two states.

Competitive Power Ventures and state regulators have argued that the subsidies are legal. The courts ruled with PPL and other plaintiffs in saying the subsidies violated FERC jurisdiction over the wholesale electric market.

The cases revolve around a 660-MW combined-cycle plant in Maryland. CPV won a solicitation from the Maryland Public Service Commission to build a plant in the Southwest MAAC zone. PPL was joined in its challenge of the contract by Calpine, Essential Power and Lakewood Cogeneration.

CPV and the regulators are asking the high court to reinstate the contracts. CPV has gone ahead with its construction plans, despite losing a subsequent ruling by FERC. (See CPV Md. Plant Goes Forward Despite FERC Ruling.)

In Hughes v. PPL EnergyPlus (14-614), the court will consider the following questions:

• When a seller offers to build generation and sell wholesale power on a fixed rate contract basis, does the [Federal Power Act] field-preempt a state order directing retail utilities to enter into the contract?
• Does FERC’s acceptance of an annual regional capacity auction preempt states from requiring retail utilities to contract at fixed rates with sellers who are willing to commit to sell into the auction on a long-term basis?

In CPV Maryland v. PPL EnergyPlus (14-623), the court will answer two additional questions:

• Where, as a result of a state-directed procurement, the contract price to build and operate a power plant is the developer’s bid price, and may result in payments beyond what the developer earns selling the plant’s capacity in the FERC-supervised auction, is the program “field preempted” as a State’s attempt to set interstate wholesale rates?
• Is a state-directed contract to support construction of a power plant “conflict preempted” because its long-term pricing structure provides incentives different from the incentives provided by prices generated in the FERC-supervised yearly capacity auction?

The Supreme Court declined to hear two related cases in New Jersey decided by the 3rd Circuit Court.

(An earlier version of this story erroneously stated that the court would also hear arguments in the New Jersey cases.)