Law360 Quotes Chip Cannon on Supreme Court’s Power Subsidy Ruling

Chip Cannon, a partner in Akin Gump’s energy regulation, markets and enforcement practice, has been quoted in the Law360 article “High Court Power Subsidy Ruling Keeps States In The Dark,” discussing a Supreme Court ruling that said a Maryland program to offer gas-fired power plant construction subsidies was preempted under the Federal Power Act. The article reports, however, that the unanimous decision left open the possibility that states could still use other incentives for power generation construction, such as tax breaks, land grants or direct power plant subsidies.

Cannon pointed out that those types of incentives have already been utilized by many states and the court didn’t make a broad determination as to what types of state programs are permitted. It only said Maryland’s program was not. “We’re left with that gray area,” Cannon said. “The court says Maryland’s program is inappropriate — so what up until this program is appropriate, or when does it cross the line from appropriate to inappropriate?”

“Whatever incentive mechanism is developed, it can’t have a direct nexus to the wholesale power market,” Cannon added. “You could argue that any incentive could have an impact on wholesale markets, but this type of direct participation within the parameters of the market itself, that’s specifically what the court found to be unlawful.”