Category: Commerce Clause

Second Circuit Affirms the Constitutionality of New York’s Zero Emission Credit Program for Nuclear Power Plant Subsidies

Case Name: Coalition for Competitive Electricity, et al. v. Zibelman, et al. – Second Circuit

Date of Opinion: September 27, 2018

Opinion By: Judge Jacobs

In August 2016, the New York Public Service Commission (PSC) adopted a Zero Emissions Credit (“ZEC”) program as part of a plan to reduce greenhouse-gas emissions. The ZEC program subsidizes qualifying nuclear power plants, giving state-created and state-issued credits certifying zero-emission produced by participating nuclear plants. The ZEC program credit price for each MWh of electricity generated is calculated by PSC as the hypothetical environmental damage that would result from nuclear plan retirement, based upon federal task force estimates of damage from carbon emission. The price was $17.48 for the first two years of the ZEC program and, beginning in 2019, is to be calculated by PSC every two years with possible reduction based upon “renewable energy penetration” in the New York energy market and forecasts of wholesale electric energy prices.

In October 2016, plaintiffs, a group of electrical generators and trade groups, brought suit in the United States District Court for the Southern District of New York, challenging the constitutionality of the ZEC program, alleging that it is preempted by the Federal Power Act (“FPA”) and that it violates the dormant Commerce Clause.  Continue reading