Generators file federal court complaint against Illinois nuclear credits

Dive Brief:

  • The Electric Power Supply Association (EPSA) and four merchant generators have filed a complaint in the federal district court in Illinois challenging recently passed legislation in the state that grants $235 million in nuclear subsidies to two Exelon nuclear power plants.

  • The complaint alleges that the zero emission credit (ZEC) provisions of the Future Energy Jobs Act intrude on the Federal Energy Regulatory Commission’s authority over wholesale power markets and violate the dormant Commerce Clause of the Constitution. FERC is preparing to hold a staff technical conference on the issue. 

  • EPSA has also made two filings with the Federal Energy Regulatory Commission reiterating its call for expedited action in the New York ISO and the PJM Interconnection to counter the ZECs implemented by the New York and Illinois.

Dive Insight:

Nuclear power plants are under economic pressure in competitive power markets as a result of electricity prices that have been pushed down by the low cost of natural gas. Several states have taken steps to bolster the revenues of nuclear plants, which often provide a large portion of local taxes and provide low-emission baseload power.

Illinois passed the Future Energy Jobs Act in December that was patterned after a similar measure in New York. More recently Connecticut has been preparing legislation aimed at shoring up its sole nuclear plant, the 2,110-MW Millstone plant owned by Dominion Resources.

The New York, the Public Service Commission’s approval of a ZEC has attracted protests from EPSA, as well as lawsuits by generators who argue that the ZEC will distort the wholesale market.

In December, the PSC, Exelon, the Natural Resources Defense Council and the Environmental Defense Fund filed briefs in a New York federal district court seeking to dismiss the generators’ complaint.

In Illinois, the EPSA complaint makes a similar argument, saying the ZEC credits will "effectively replace" prices generated by power auctions regulated by FERC. Generators also argue the credits violate the Constitution by only favoring in-state plants. 

The generators filing suit in Illinois are Eastern Generation, Calpine, Dynegy and NRG Energy.

Acting FERC Chairman Cheryl LaFleur this week said the commission is preparing to hold a staff technical conference on the out-of-market contract issues that ZECs pose in competitive markets.

Further details about the conference are not yet available from FERC.

The conference would be a staff conference because FERC only has two sitting commissioners.

Chairman Norman Bay resigned after President Donald Trump appointed LaFleur acting chairman, leaving three open positions at the commission, not enough for a quorum.

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Top image credit: Exelon