Journal of Climate & Energy Law Issue Search
|Title||Clean Energy and the Price Preemption Ceiling|
|Abstract||Part I of this Article provides an illustration of the feed-in tariff—one clean energy innovation many state and municipal governments have enacted to encourage investment in renewable energy. In a nutshell, the feed-in tariff is a secure contract for renewable power at a set price over a term of years that provides a return to investors in these projects, such as a homeowner installing a solar panel or wind turbine. Part II of this Article describes preemption issues that have risen with feed-in tariffs under two federal statutes—the Public Utility Regulatory Policies Act of 1978, which requires utilities to purchase power from certain renewable sources, and the Federal Power Act (adopted in 1935), which requires just and reasonable rates. FERC’s unequivocally pro-preemption position echoes judicial decisions that endorse consumer protection and wholesale market objectives over other goals in energy policy, allowing these to serve as a ceiling for state pricing of renewable power. Part II also highlights the impacts these decisions have on the efficacy of state feed-in tariffs and their inconsistency with subsidies that are not preempted.
In Part III, I argue that this pro-preemption position regarding feed-in tariffs may provide clear answers to federal-state power issues in this narrow context, but such clarity comes at a cost. A preemption analysis of state clean energy policies requires identification of the relevant federal law and its purposes, as well as an evaluation of whether state law advances or impedes these purposes. The history and purposes of federal energy statutes not only include consumer protection and competition in wholesale markets, but also include goals of conservation, efficiency, and fuel diversity, as well as goals related to energy independence and security. Recognizing a diversity of goals in energy law has important implications for both FERC and states as they forge policies such as feed-in tariffs to encourage renewable power and other clean energy issues, including cost recovery for high-voltage transmission lines and demand response measures aimed at conservation. Emphasis on a singular consumer protection goal favors treating federal law as a preemption ceiling, rather than a floor—a methodology that limits the ability of energy law to incorporate conservation and efficiency goals. More consistent recognition of these diverse goals of energy laws would facilitate treating federal law as a statutory floor rather than a ceiling for setting prices, better allowing sub-national governments to innovate in their clean energy policies.