U.S. court overrules N.J. law subsidizing power plant construction

D.C. Circuit Court dismissed appeal by Sunflower Electric Holcomb expansion power plant Kansas Colorado

A federal judge ruled New Jersey cannot subsidize the construction of new natural gas-fired power plants in the state, according to a report from Reuters. The decisions came in a lawsuit filed by Pennsylvania power company PPL Corp. and other power generators.

U.S. District Judge Peter Sheridan stated in the decision the law was unconstitutional because it violates the Supremacy Clause of the U.S. Constitution and infringed on the U.S. Federal Energy Regulatory Commission’s authority to regulate the wholesale power in interstate commerce, according to the report.

The state’s Long Term Capacity Agreement Pilot Program Act, passed in January 2011, required utilities to enter into long-term capacity contracts with generators chosen by the New Jersey Board of Public Utilities, according to Reuters.

The decision is similar to one made by a federal judge earlier this month overturning Maryland’s attempt to subsidize capacity prices to get new generation built, Reuters reported.

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