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New Jersey Appeals Decision Voiding Power Plant Subsidy Plan

New Jersey has appealed a judge's decision last month that struck down a Board of Public Utilities (BPU) plan to have ratepayers subsidize the cost to build new natural gas-fired power plants.

In documents filed with the U.S. Court of Appeals for the Third Circuit Thursday, John J. Hoffman, acting attorney general of New Jersey, notified the court that the BPU was appealing Judge Peter G. Sheridan's finding that the state's Long Term Capacity Agreement Pilot Program Act (LCAPP) is preempted by the Federal Power Act and in violation of the Supremacy Clause of the U.S. Constitution (see Daily GPI,Oct. 17).

By using ratepayer subsidies the plan would undermine a basic tenet of the open grid, the FERC-authorized competitive auction run by the PJM Interconnection in which generators bid to provide service to the grid, the judge said in his decision.

The plaintiffs -- Calpine Corp., Exelon Generation Co., PSEG Power, Public Service Electric and Gas Co., Atlantic City Electric Co. and subsidiaries of PPL Corp. -- won the day, though Sheridan found it reasonable that the BPU "would incentivize construction in areas where reliability concerns are in flux."

Two years ago, New Jersey Gov. Chris Christie unveiled the state's draft 2011 energy master plan, which among other things called for coal-fired generation to be phased out in favor of natural gas (see Daily GPI,June 8, 2011). Through the LCAPP, New Jersey has planned three gas-fired combined-cycle generation projects.

Sheridan's decision came on the heels of another District Court judge invalidating a Maryland Public Service Commission order that required utilities to enter into long-term power supply contracts with a developer chosen by the PSC to build a natural gas-fired plant (see Daily GPI,Oct. 3).

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