Village of Old Mill Creek v. Star, No. 17-2433 (7th Cir. 2018)Annotate this Case
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.