977 F. Supp. 2d 372
D.N.J.2013Background
- This is a non-jury case in which the Court reviews whether NJ’s LCAPP Act and Board actions preempted by the Federal Power Act and violate the Supremacy Clause.
- Defendants are the New Jersey Board of Public Utilities and four current/former commissioners; CPV Power Development is an intervenor/defendant; Plaintiffs are energy marketers/generators participating in PJM markets.
- LCAPP creates a pilot program awarding Standard Offer Capacity Agreements (SOCAs) to eligible generators, with EDCs procuring 2,000 MW for up to 15 years and paying the difference between SOCP and RPM-era costs.
- RPM (Reliability Pricing Model) and PJM’s capacity, energy, and ancillary services markets operate under FERC-approved tariffs; RPM auctions clear capacity three years forward.
- LCAPP’s SOCAs intertwine with PJM RPM mechanics, requiring generators to participate in RPM and to comply with RPM rules, thereby tying Board-set payments to RPM outcomes.
- Plaintiffs argue LCAPP distorts RPM price signals, undermines market-based investment signals, and imposes a state-imposed price that supplants wholesale interstate pricing set by FERC.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does SOCAs’ pricing intrude on RPM/wholesale pricing regulated by FERC? | SOCAs set a Board-approved price for capacity in interstate sales, displacing RPM prices. | SOCAs are financial mechanisms not involving physical delivery and thus not subject to RPM oversight. | SOCAs occupy the same field as RPM and intrude on FERC pricing. |
| Are LCAPP and SOCAs preempted under field preemption by the Federal Power Act? | LCAPP substitutes a state price for wholesale interstate capacity sales, blocking FERC authority. | LCAPP is a state measure focusing on reliability and environmental/community benefits, not a wholesale-rate regulation. | LCAPP is preempted under field preemption; conflicts with FERC's exclusive power. |
| Are LCAPP and SOCAs preempted under conflict preemption/Commerce Clause analysis? | State action directly interferes with Congress’s objective to regulate interstate wholesale energy rates. | State incentives for in-state generation do not defeat federal goals and LDAs justify state interest. | Preemption also established under conflict preemption; commerce concerns addressed but not controlling. |
Key Cases Cited
- Pub. Utils. Comm’n of R.I. v. Attleboro Steam & Elec. Co., 273 U.S. 83 (1927) (established interstate wholesale regulation gap and preemption implications)
- New York v. FERC, 535 U.S. 1 (2002) (established federal authority over wholesale electricity regulation)
- FPC v. S. Cal. Edison Co., 376 U.S. 205 (1964) (federal jurisdiction over interstate wholesale sales; field preemption context)