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Appeals court rules for PPL subsidiary over subsidizing power plant construction

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A U.S. appeals court ruling against the Maryland commission that oversees utilities in the state sets a national precedent to maintain competitive markets in power generation, a Pennsylvania power utility said.

The three-judge panel on the U.S. Court of Appeals for the Fourth Circuit in Richmond, Va., ruled the Maryland Public Service Commission overstepped its bounds in an order subsidizing development of new natural-gas-fired generation plant in the state.

The court’s decision upholds a lower court’s ruling on the case filed, in part, by PPL EnergyPlus LLC. That company is the energy marketing and trading subsidiary of Allentown-based PPL Corp., which also provides power utilities for part of the midstate.

“We’re pleased with the U.S. Court of Appeals decision, which affirms the lower court, upholds the integrity of competitive generation markets, and protects consumers who would have unnecessarily been forced to assume the financial risk of new power plant construction,” said Robert J. Grey, executive vice president, general counsel and secretary for PPL Corp.

The commission’s order, issued in April 2012, was found unconstitutional because it infringed on the Federal Energy Regulatory Commission’s exclusive authority to regulate the wholesale sale of electricity in interstate commerce, according to a news release from PPL.

The order required utilities to enter into long-term power supply contracts with CPV Maryland LLC, a developer chosen by the commission to build a gas-fired power plant in Maryland, according to PPL. In doing so, the order essentially guaranteed that the developer would receive subsidized energy and capacity prices when it sold its output, giving it an unfair advantage over other generators and allowing it to bid in artificially low prices into PJM’s annual capacity auction, according to PPL

The case is PPL EnergyPlus LLC v. Nazarian, 13-2419.

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