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Renewables advocates applaud appeals court’s decision to uphold state nuclear subsidies

A U.S. appeals court upheld an energy policy created by the state of Illinois that benefits the state’s nuclear power plants. Aside from pleasing the state’s nuclear power plant owners, the decision was welcomed by clean energy advocates who want to protect a state’s ability to set up renewable portfolio standards and other policies that boost solar and wind energy.

The U.S. Court of Appeals for the 7th Circuit ruled Thursday that Illinois’ zero-emission credit (ZEC) program does not exceed state authority.

Illinois adopted the ZEC program in 2016 to keep some nuclear power plants in service in order to help meet the state’s greenhouse gas reduction goals. Chicago-headquartered Exelon Corp. had threatened to shut its Clinton and Quad Cities nuclear plants because they were losing money.

With the Trump administration pushing fossil fuels, state renewable energy programs are viewed as crucial to the nation’s ability to reduce greenhouse gas emissions to address climate change. A legal defeat of Illinois’s ZEC program could have been used to overturn renewable energy policies in other states.

Illinois created the ZEC program to compensate the nuclear generators for providing electricity without carbon emissions. The three-judge panel’s ruling on Thursday upheld the U.S. District Court for the Northern District of Illinois’ decision, issued in July 2017, in favor of the Illinois policy.

Renewable energy advocates were closely watching the case, Electric Power Supply Association v. Star, because they feared state programs that benefit solar and wind energy could be threatened if the court had ruled Illinois did not have the authority to implement its ZEC program.

“The court’s decision is clear: states have broad authority over energy policy,” Miles Farmer, a clean energy attorney at the Natural Resources Defense Council (NRDC), said Thursday in a statement.

While the court upheld Illinois’ nuclear support program, the case is also good news for clean technologies like solar and offshore wind, “because the court’s logic extends to programs advancing these technologies,” Farmer said.

New York, Connecticut, and New Jersey have also adopted rules to subsidize nuclear power plants. In 2016, the New York Public Service Commission approved subsidies as part of an effort to keep nuclear reactors operating at a time of low prices for power as well as for natural gas, an alternative generator fuel.

Opponents of the Illinois policy argued that it was discriminatory and violated the Commerce Clause of the Constitution because it took away authority granted to federal regulators. They argued the Illinois subsidies are simply a bailout for failing nuclear power plants owned by Exelon Corp., an Chicago-headquartered company.

The ZEC program, according to its critics, interferes with wholesale power markets, an area over which the Federal Energy Regulatory Commission (FERC) has jurisdiction.

In their rejection of the opponents’ argument, the 7th Circuit judges explained that under the plaintiffs’ line of thinking, whenever Illinois — or any other state — takes a step that will increase or reduce the state’s generation capacity, or affect the price of energy, then the state policy is invalid. “That can’t be right; it would be the end of federalism,” the judges ruled.

The NRDC, Environmental Defense Fund (EDF), and other groups filed a friend of the court brief in the case supporting Illinois’ right to establish its own energy policies.

“This is a resounding victory for Illinois, and for all states that are working to transition to clean energy in order to reduce unhealthy air pollution and address the growing threat of climate change,” EDF Senior Attorney Michael Panfil said Thursday in a statement.

FERC also filed a friend of the court brief in favor of upholding the Illinois law. The commission said the Federal Power Act does not override the Illinois program because that program does not require participation in federal-jurisdictional markets and is targeted at an attribute of generation resources — a plant’s ability not to emit carbon dioxide — over which Illinois has authority.


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