How Far Can States Go In Supporting Renewable Energy on The Energy Collective April 23 2014

State policies promoting the deployment of renewable energy have played important roles in the rapid growth of wind and solar energy.  But over the past few years, those policies are increasingly being challenged as unconstitutional.

A common theme of the challenges is that State regulations of interstate energy markets face constitutional limits.  According to challengers, such regulation threatens to balkanize interstate energy markets, or is preempted by Federal authority over those markets.  Last week, a Federal Judge in Minnesota ruled that a State law that sought to reduce the State’s reliance on coal-fired generation overreached by regulating out-of-state electricity production.  While the Judge’s decision is premised on the specific language in the Minnesota statute, her logic, if applied by other courts, could threaten the viability of States’ renewable energy policies.

In 2007, the Minnesota legislature passed sweeping energy reform legislation known as the Next Generation Energy Act. The Act strengthened the State’s Renewable Portfolio Standard, increased energy efficiency efforts, and required State agencies to develop a plan for reducing greenhouse gas emissions.  In the absence of such a plan, the law declared that “no person shall . . . import or commit to import . . .” energy from a newly constructed coal-fired power plant or enter into a new long-term power purchase agreement with a coal-fired generator.  The Legislature’s likely intent was to reduce Minnesota utilities’ emissions by barring them from signing new contracts with coal plants. Indeed, a year earlier, California passed a similar law that barred California utilities from signing a long-term contract with a baseload power plant that exceeded a certain greenhouse gas emission limit. . . .