The justices ruled Tuesday that the Maryland plan interferes with federal law governing wholesale electricity rates.
The ruling is a setback for Maryland and other states that want to ensure a reliable supply of electricity for customers at reasonable rates.
The case involves a 2012 decision by state regulators to order construction of natural gas power plant. Officials offered the winning bidder a financial incentive by requiring utilities to buy electricity from the plant for 20 years at a fixed price.
Lower courts sided with rival power suppliers who said the incentive interfered with pricing in wholesale markets, which are subject to federal regulation.