Evolving Jurisdiction Under the Federal Power Act: Promoting Clean Energy Policy

Abstract

In response to an emerging electricity sector, Congress passed the Federal Power Act (FPA) in 1935 and enshrined a division of jurisdiction between the federal government and the states. Federal jurisdiction would control wholesale electricity and transmission while state jurisdiction would control retail electricity. While Congress intended to establish a jurisdictional bright line, uncertainties in applying this division lie at the heart of some of today’s most important state and federal renewable energy policy challenges. Significant regulatory, structural, and technological changes since the FPA’s passage have tested the adaptability and coherence of this jurisdictional division. To explore the underlying areas of tension that have emerged, I examine two state policies aimed at promoting renewable energy, net metering and feed-in tariffs, and one federal policy, the integration of demand response into wholesale electricity markets. These examples reveal how a strict reading of the retail-wholesale jurisdictional division is ill-suited for the modern electricity sector. They also show how strategic efforts by the Federal Energy Regulatory Commission (FERC), together with state legislatures and public utility commissions, have stretched the limits of the FPA in order to promote clean energy policies. Together these considerations demonstrate that clarifying jurisdictional lines will involve unexpected tradeoffs in substantive policy. This Comment builds on existing literature in several important ways. Some scholars have examined the jurisdictional tensions that underlie individual policies such as net metering, feed-in tariffs, and demand response. Others have considered the congruence of jurisdictional authority, institutional capacity, and political exigency among diverse levels of decisionmaking. This Comment converges these lines of scholarship to provide a thorough account of contemporary challenges confronting the FPA’s jurisdictional division and how they implicate clean energy policy at both state and federal levels. This account is particularly relevant today, given the U.S. Supreme Court’s recent decision in FERC v. Electric Power Supply Association condoning a pragmatic and functional understanding of FERC’s exercise of federal authority over demand response resources.

Saarman-63-5
By uclalaw