Judge: New Jersey cannot subsidize new power plants

By Editors of Electric Light & Power/ POWERGRID International


According to a federal court ruling, the state of New Jersey cannot subsidize the building of new natural gas-fired power plants in the state. U.S. District Judge Peter Sheridan ruled in favor of PPL Corp. and other power utility companies that sued to prevent the subsidies.

The case was heard in April and May of 2013.

PPL Corp. and its fellow utilities argued they could lose money on the power generation capacity they sell from existing power plants if the New Jersey subsidizes construction of new plants.

According to the decision, New Jersey's capacity law violates the Supremacy Clause of the U.S. Constitution and also infringed upon the Federal Energy Regulatory Commission's (FERC) authority to regulate wholesale power sales.

Jersey's Long Term Capacity Agreement Pilot Program Act was passed in January 2011, and required utilities to enter into long-term capacity contracts with generators hand-picked by the New Jersey Board of Public Utilities.

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