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The Supreme Court dismissed this appeal challenging the Public Utility Commission’s decision to allow Dayton Power and Light Company (DP&L) to withdraw and terminate its second electric-security plan (ESP II), holding that the Commission’s approval of DP&L’s third electric-security plan (ESP III) rendered this case moot. The Commission allowed DP&L to withdraw and terminate its ESP II rate plan and service stability rider (SSR) charge. The ESP II rate plan and its SSR charge were then replaced by ESP III, which the Commission approved. Appellant’s appealed the Commission’s order regarding ESP II. The Supreme Court dismissed the appeal as moot, holding that because there was no remedy that the Court could legally order, the appeal constituted only a request for an advisory ruling, and the controversy was no longer live. View "In re Application of Dayton Power & Light Co." on Justia Law

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In 1999, after deregulation of the energy industry in Illinois, Exelon sold its fossil-fuel power plants to use the proceeds on its nuclear plants and infrastructure. The sales yielded $4.8 billion, $2 billion more than expected. Exelon attempted to defer tax liability on the gains by executing “like-kind exchanges,” 26 U.S.C. 1031(a)(1). Exelon identified its Collins Plant, to be sold for $930 million, with $823 of taxable gain, and its Powerton Plant, to be sold for $870 million ($683 million in taxable gain) for exchanges. Exelon identified as investment candidates a Texas coal-fired plant to replace Collins and Georgia coal-fired plants to replace Powerton. In “sale-and-leaseback” transactions, Exelon leased an out-of-state power plant from a tax-exempt entity for a period longer than the plant’s estimated useful life, then immediately leased the plant back to that entity for a shorter sublease term. and provided to the tax-exempt entity a multi-million-dollar accommodation fee with a fully-funded purchase option to terminate Exelon’s residual interest after the sublease. Exelon asserted that it had acquired a genuine ownership interest in the plants, qualifying them as like-kind exchanges. The Commissioner disallowed the benefits claimed by Exelon, characterizing the transactions as a variant of the traditional sale-in-lease-out (SILO) tax shelters, widely invalidated as abusive tax shelters. The tax court and Seventh Circuit affirmed, applying the substance over form doctrine to conclude that the Exelon transactions failed to transfer to Exelon a genuine ownership interest in the out-of-state plants. In substance Exelon’s transactions resemble loans to the tax-exempt entities. View "Exelon Corp. v. Commissioner of Internal Revenue" on Justia Law

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Under traditional rate regulation, an energy utility must first make improvements to its infrastructure before it can recover their cost through regulator-approved rate increases to customers. The process is an expensive, onerous rate-making case, which involves a comprehensive review of the utility’s entire business operations. In 2013 the legislature authorized utilities to obtain regulatory preapproval for “designated” improvements to their infrastructure. Under the “TDSIC” Statute, a utility can seek regulatory approval of a seven-year plan that designates eligible improvements, followed by periodic petitions to adjust rates automatically as approved investments are completed. The Indiana Utility Regulatory Commission preapproved approximately $20 million in infrastructure investments and authorized increases to NIPSCO’s natural-gas rates under the TDSIC mechanism. The approval referred to categories of improvements that describe broad parameters for future improvements but did not designate those improvements with specificity. The Indiana Supreme Court reversed, in part, concluding that the TDSIC Statute permits periodic rate increases only for specific projects a utility designates, and the Commission approves, in the threshold proceeding and not for multiple-unit projects using ascertainable planning criteria. A utility must specifically identify the projects or improvements at the outset in its seven-year plan and not in later proceedings involving periodic updates. Commission approval of “broad categories of unspecified projects defeats the purpose of having a plan.” View "NIPSCO Industrial Group v. Northern Indiana Public Service Co." on Justia Law

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Kentucky Utilities (KU) burns coal to produce energy, then stores the leftover coal ash in two man-made ponds. Environmental groups contend that the chemicals in the coal ash are contaminating the surrounding groundwater, which in turn contaminates a nearby lake, in violation of the Clean Water Act (CWA), 33 U.S.C. 1251(a), and the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6902(a). The Sixth Circuit affirmed, in part, the dismissal of their suit. The CWA does not extend liability to pollution that reaches surface waters via groundwater. A “point source,” of pollution under the CWA is a “discernible, confined and discrete conveyance.” Groundwater is not a point source. RCRA does, however govern this conduct, and the plaintiffs have met the statutory rigors needed to bring such a claim. They have alleged (and supported) an imminent and substantial threat to the environment; they have provided the EPA and Kentucky ninety days to respond to those allegations, and neither the EPA nor Kentucky has filed one of the three types of actions that would preclude the citizen groups from proceeding with their federal lawsuit, so the district court had jurisdiction. View "Kentucky Waterways Alliance v. Kentucky Utilities Co." on Justia Law

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The DC Circuit granted ANR's petition for review challenging FERC's decision refusing to allow ANR to charge market-based rates, as opposed to cost-based rates, for its natural gas storage services. The court held that FERC acted arbitrarily and capriciously because it did not provide any reasonable justification for allowing DTE affiliates but not ANR to charge market-based rates. Furthermore, FERC's market-power analysis was internally inconsistent. The court also held that ANR's remaining contentions lacked merit. The court remanded for further proceedings. View "ANR Storage Co. v. FERC" on Justia Law

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Regional transmission organizations manage the interstate grid for electricity, conduct auctions through which many large generators of electricity sell most or all of their power, and are regulated by the Federal Energy Regulatory Commission (FERC) Illinois subsidizes nuclear generation facilities by granting “zero emission credits,” which generators that use coal or gas to produce power must purchase from the recipients at a price set by the state. Electricity producers and municipalities sued, contending that the price‐adjustment aspect of the system is preempted by the Federal Power Act because it impinges on the FERC’s regulatory authority. They acknowledge that a state may levy a tax on carbon emissions; tax the assets and incomes of power producers; tax revenues to subsidize generators; or create a cap‐and‐trade system requiring every firm that emits carbon to buy credits from firms that emit less carbon. They argued that the zero‐emission‐credit system indirectly regulates the auction by using average auction prices as a component in a formula that affects the credits' cost. The Seventh Circuit affirmed summary judgment for the defendants. Illinois has not engaged in discrimination beyond that required to regulate within its borders. All Illinois carbon‐emitting plants need to buy credits. The subsidy’s recipients are in Illinois. The price effect of the statute is felt wherever the power is used. All power (from inside and outside Illinois) goes for the same price in an interstate auction. The cross‐subsidy among producers may injure investors in carbon‐ releasing plants, but only plants in Illinois. View "Village of Old Mill Creek v. Star" on Justia Law

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After initiating Chapter 11 bankruptcy proceedings, Debtors entered into an Agreement: NextEra would acquire Debtors’ 80% interest in Oncor, the largest electricity transmission and distribution system in Texas, for approximately $9.5 billion. The Agreement obligated Debtors to pay NextEra $275 million if NextEra did not ultimately acquire Debtors’ interest in Oncor and Debtors either sold to someone else or otherwise emerged from bankruptcy, with several exceptions. If the Public Utility Commission of Texas (PUCT) did not approve the merger, payment would not be triggered if the Agreement was “terminated . . . by [NextEra] . . . and the receipt of PUCT Approval (without the imposition of a Burdensome Condition) [wa]s the only condition . . . not satisfied or waived in accordance with this Agreement.” About a year after approving the Agreement, and after PUCT expressed concern about the condition, the bankruptcy court granted a motion for reconsideration and disallowed the Termination Fee in the event that the PUCT declines to approve the transaction and, as a result, the agreement is terminated, regardless of whether the Debtors or NextEra subsequently terminates the agreement. Were it not for that order, NextEra would be entitled to the $275 million. The Third Circuit affirmed, rejecting NextEra’s arguments that the motion was untimely and, alternatively, that the motion should have been denied on the merits because the termination fee provision, as originally drafted, was an allowable administrative expense under 11 U.S.C. 503(b). View "In re: Energy Future Holdings" on Justia Law

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Allco Renewable Energy Limited (Allco) appealed the Vermont Public Utility Commission’s (PUC) denial of Allco’s motion to intervene as a party in proceedings concerning whether Green Mountain Power Corporation (GMP) could purchase power generation facilities outside of Vermont. Allco argued that it should have been allowed to intervene because it meets the criteria for intervention set out in the PUC’s own rules. In particular, Allco argued it had a substantial interest in the proceedings both as a ratepayer and as a competing supplier of power. Allco also appealed the PUC’s eventual decision to allow the purchases. The Vermont Supreme Court affirmed the PUC’s denial of Allco’s motion to intervene and accordingly dismissed Allco’s second appeal. View "In re Petition of Green Mountain Power Corp. for Approval to Invest in Hydroelectric Generation Facilities Located Outside Vermont (Allco Renewable Energy Limited, Appellant)" on Justia Law

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Petitioners sought to prevent the expansion of Transco’s interstate natural gas pipeline facilities, arguing that the Federal Energy Regulatory Commission (FERC) violated the Natural Gas Act (NGA), 15 U.S.C. 717–717z and environmental protection statutes, by arbitrarily approving Transco’s proposed project. Petitioners also argued that the New Jersey Department of Environmental Protection (NJDEP) violated state law by improperly issuing permits required under federal law before commencement of construction activities and by denying the petitioners’ request for an adjudicatory hearing to challenge the permits, based only on the NJDEP’s allegedly incorrect belief that the New Jersey regulations establishing the availability of such hearings were preempted by federal law. The Third Circuit concluded that the challenges to FERC’s orders lacked merit because no discharge-creating activity can commence without New Jersey independently awarding Transco with a Section 401 permit; no activities that may result in a discharge can follow as a logical result of just FERC’s issuance of the certificate. FERC adequately addressed the need for the project and its cumulative impacts, as required by the National Environmental Policy Act. The court remanded to NJDEP. NJDEP misunderstood the scope of the NGA’s assignment of jurisdiction to the federal Courts of Appeals, rendering unreasonable the sole basis for its denial of the petitioners’ request for a hearing--preemption. View "Township of Bordentown v. Federal Energy Regulatory Commission" on Justia Law

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The Natural Gas Act (NGA) requires a Certificate of Public Convenience and Necessity from the Federal Energy Regulatory Commission, 15 U.S.C. 717f(c)(1)(A), for construction or operation of a natural gas pipeline, which requires compliance with other legal mandates. Transco sought a Certificate for expansion of its natural-gas distribution network, then received Water Quality Certification under the Clean Water Act, (CWA) 33 U.S.C. 1341(a)(1) from the Pennsylvania Department of Environmental Protection (PADEP), subject to conditions requiring a permit under the National Pollutant Discharge Elimination System, for discharges of water during hydrostatic pipeline testing, and state permits, covering erosion and sediment disturbance and obstructions and encroachments on Pennsylvania waters. Transco challenged the conditions in the Third Circuit under the NGA and before the Pennsylvania Environmental Hearing Board. The Third Circuit concluded that it has jurisdiction; NGA provides “original and exclusive jurisdiction" to review a state agency’s “action” taken “pursuant to Federal law to issue . . . any . . . concurrence” that federal law requires for the construction of a natural-gas transportation facility. PADEP issues Water Quality Certifications “pursuant to federal law," which requires PADEP concurrence before construction can proceed. The court then rejected claims that PADEP failed to provide public notice the CWA requires and acted arbitrarily by issuing a Certification that was immediately effective despite being conditioned on obtaining additional permits; that PADEP’s decision violated the Due Process and Takings Clauses, given that the approval was necessary for Transco to begin eminent domain proceedings; and that the approval violated PADEP’s obligation to safeguard the Commonwealth’s natural resources. View "Delaware Riverkeeper Network v. Secretary Pennsylvania Department of Environmental Protection" on Justia Law