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Energy Jurisdiction in the Twenty-First Century

Mar 26, 2020

Kristoffer James S. Jacob

Volume 44 (2017) - Issue 2

The U.S. electrical grid is a modern marvel, consisting of nearly 3500 utility organizations, 450,000 miles of transmission lines, and six million miles of distribution cable that span across and crisscross the country to serve over 334 million people (and growing) whose total electricity demand exceeds 830 gigawatts. But the grid is evolving, as it has since its inception. From a relatively simple beginning with fewer power suppliers and unsophisticated technology, the grid today is characterized by robust competition, greater innovation, and a blurring distinction between the wholesale sale and retail sale of electricity.

In the midst of the evolution of the grid is the Federal Power Act. At its core, the Act grants the Federal Energy Regulatory Commission jurisdiction to regulate the wholesale sale of electricity, but reserves to the states their traditional jurisdiction over generation, intrastate transmission and distribution, and retail sales. This bright-line jurisdiction between the Commission and the states has remained relatively unchanged since the Federal Power Act’s enactment in spite of the evolution of the grid.

A bright-line jurisdiction, however, is antiquated in the modern grid where there are no bright lines, as activities in the wholesale market naturally affect the retail market, and vice versa. By drawing on three of the Supreme Court’s most recent energy law cases, this Note offers a comprehensive look at energy jurisdiction, and illuminates the problems of a bright-line analysis and expansive federal jurisdiction in the modern grid. First, this Note considers Hughes v. Talen Energy Marketing, LLC to highlight the resulting jurisdictional tensions between the Federal Energy Regulatory Commission and the states in the modern grid. As this Part illustrates, courts have developed and applied a bright-line analysis that favors expansive federal jurisdiction. Second, this Note uses Federal Energy Regulatory Commission v. Electric Power Supply Association to illustrate the practical results of an expansive federal jurisdiction in energy regulation. Third, this Note discusses the resulting policy implications to state energy goals. Finally, this Note concludes by drawing on Oneok, Inc. v. Learject, Inc. to propose a framework that balances the mandates of the Federal Power Act, and federal and state jurisdiction in the twenty-first century grid. This Note, ultimately, hopes to help bring energy regulation to the twenty-first century.