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Illinois Clean Energy and Nuclear Plant Subsidies Upheld

By George Khoury, Esq. on September 21, 2018 11:20 AM

The Seventh Circuit Court of Appeals has upheld subsidies passed by the state of Illinois in 2016 to support clean and nuclear energy producers in the state.

The state law, as the challengers alleged, allowed in state energy producers to undercut out of state producers in the federally regulated interstate energy auction markets, thereby violating a federal law preventing states from interfering with interstate energy commerce. However, as the appellate court found, the Illinois law didn't infringe upon the interstate energy trade as much as it just gave in state producers more of an incentive to produce clean energy.

Interference Versus Effect

While the appellate and district courts recognized that the Illinois law certainly has an effect on the interstate auction market, it noted that there is a difference between passing a law that helps in state producers compete and passing a law designed to manipulate the federal auction market.

The appellate court explained that, following Hughes, there is "a line between state laws whose effect depends on a utility's participation in an interstate auction (forbidden) and state laws that do not so depend but that may affect auctions (allowed)." In this case, that line was not crossed.

As industry insiders explain, if the case had gone the other way, there could have been significant ramifications nationwide, as many states have clean energy programs that could be seen as interfering rather than just having an effect on the interstate energy trade.

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