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On September 13, the US Court of Appeals for the Seventh Circuit affirmed an Illinois district court’s dismissal of a case challenging the Illinois zero-emissions credit (ZEC) program. Firm client Exelon Corp. intervened in defense of the program. In the initial complaint, independent power producers and a group of Illinois energy consumers argued that the program—which compensates nuclear power plants for producing energy without emitting greenhouse gases—was preempted by the Federal Power Act because it affected wholesale electricity markets regulated by the Federal Energy Regulatory Commission. The district court dismissed the case in July 2017, ruling in Exelon’s favor on every issue presented. The plaintiffs appealed, but the Seventh Circuit affirmed the district court’s ruling.
“The ZEC system can influence the auction price only indirectly, by keeping active a generation facility that otherwise might close…,” the Seventh Circuit said in its opinion. “But because states retain authority over power generation, a state policy that affects price only by increasing the quantity of power available for sale is not preempted by federal law.”