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Supreme Court hears arguments on fixed-rate contracts with energy provider

[JURIST] The US Supreme Court [official website] heard oral arguments [day call, PDF] Wednesday in cases dealing with fixed-rate contracts with an energy provider. The court consolidated a pair of cases, Hughes v. Talen Energy Marketing and CPV Maryland, LLC v. Talen Energy Marketing [SCOTUSblog materials], concerning whether the state of Maryland usurped the authority of the Federal Energy Regulation Commission (FERC) [official website] to approve rates in federal energy markets by entering into fixed-rate contracts with an energy provider. The Federal Power Act (FPA) [text] gives the FERC power to regulate interstate energy markets. One of those powers is approving wholesale energy rates. Therefore, it is a concern [Cornell LII materials] as to whether Maryland encroached on the FERC's rate-setting power by entering a fixed-rate contract with an energy provider. Petitioners argued that Maryland did not intrude on federal authority as Maryland did not distort the wholesale capacity auction. Respondents in turn argued that Maryland specifically targeted the federal market with its fixed-rate contracts and by requiring the state-selected generator to bid into and clear a capacity auction in order to receive the guaranteed payments provided for in the contract. In rebuttal, petitioners claimed that they did not require a bid into an auction but rather there was an agreement to do so in response to a competitive procurement, which the FERC has no issue with. Furthermore, petitioner argued it would have been impossible for Maryland to target the federal auction as the state could not regulate the auction, the energy providers, or the outcome, as the FERC controls all of that.

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