Dual Electricity Federalism Is Dead, But How Dead And What Replaces It?

The Supreme Court decided three cases in the past year involving the split of jurisdiction between the Federal Energy Regulatory Commission (FERC) and the states in the energy sector: FERC v. Electric Power Supply Association, Hughes v. Talen Energy Marketing and ONEOK v. Learjet. This Article concludes that these watershed decisions herald a new approach to governing the rapid evolution of the modern electric grid. Discussing the decisions, the analysis demonstrates that they mark the end of “dual federalism” in electricity law that treated federal and state regulators as operating within separate and distinct spheres of authority, and proposes that they instead suggest a system of shared, or concurrent federalism intended to promote the respective capabilities of FERC and the states for innovating on the electric grid. The Article describes the results in all three decisions and then discusses FERC’s authority under the Federal Power Act to regulate “practices” “directly affecting” wholesale rates as it relates to two ambitious programs: California’s regional grid operator’s proposal to integrate distributed energy resources into wholesale markets, and the component of the New York “Reforming the Energy Vision” proposal that would establish markets to coordinate activities involving aggregation of electricity resources and distribution to end users. In both cases, the Article concludes that FERC can use its authority to influence policy development. The Article also discusses and applies the principles of Hughes to the New York “Zero Emissions Credit” program proposed to provide support payments to keep nuclear power plants in operation, concluding that some portions of the program design might be impermissible