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EPSA-Led Coalition Urges Supreme Court to Reaffirm Integrity of Energy Contracts
EPSA-Led Coalition Urges Supreme Court to Reaffirm Integrity of Energy Contracts
WASHINGTON, D.C. - The Electric Power Supply Association (EPSA) has filed a "friend of the court" brief with the U.S. Supreme Court supporting the petition of NRG Power Marketing, LLC, et al. to reverse a lower court decision that threatens the integrity of privately negotiated energy contracts when challenged by any entity not a party to the contract. EPSA was joined by 12 other organizations representing a diverse array of participants in the electric and natural gas industries in filing its amici curiae brief urging the Supreme Court to reverse a D.C. Circuit Court decision (Maine Public Utilities Commission v. FERC). That decision fashioned a new exception to the Mobile-Sierra doctrine when contracts are challenged by non-contracting third parties.
EPSA President and CEO John E. Shelk said, "As the Supreme Court affirmed last summer in its Morgan Stanley decision, preserving the integrity of contracts is vital to promoting capital investment in the energy industry. In order to ensure that consumers continue to benefit from efficient and reliable electricity supplies, the integrity of private contracts must be upheld regardless of the identity of the challenging party. By reversing the lower court's decision in this case, the Supreme Court would reaffirm that, in considering requests to modify contracts, the Federal Energy Regulatory Commission has no authority to look beyond the public interest or to modify contracts in the service of private agendas."
In its brief, EPSA said the Federal Power Act and the Supreme Court's longstanding precedents, including last year's Morgan Stanley decision, protect the integrity of privately negotiated contracts. Mobile-Sierra applies the just and reasonable standard for contracts in a balanced, even-handed manner in order to protect the public interest. The D.C. Circuit's decision "carves out a large, novel, and destabilizing exception" which would allow almost any contract to be challenged by a non-contracting party, thereby injecting regulatory uncertainty and contractual instability into the energy industry. The brief explains, "From an investor’s perspective, it makes no difference whether a contract is subject to challenge by a disgruntled contracting party or by a 'non-contracting third party.' In either instance, investors will discount the value of contracts if there is a material risk that the Commission may later abrogate."
The brief states, "If allowed to stand, the D.C. Circuit's newly minted third-party exception will eviscerate the Mobile-Sierra doctrine, and consign Morgan Stanley to a mere footnote in the regulation of the energy industry. As a practical matter, a third-party exception to Mobile-Sierra ensures that virtually no wholesale energy contract is protected from abrogation." If not corrected, EPSA argued that the D.C. Circuit's decision threatens to expose consumers to the very type of high and volatile prices and frequent supply shortages that the Federal Power Act was designed to prevent.
Reversing the judgment will restore regulatory contract stability to the nation's wholesale energy markets, EPSA said. EPSA was joined by Colorado Independent Energy Association, Electric Power Generation Association, Independent Energy Producers Association, Independent Petroleum Association of America, Independent Power Producers of New York, Interstate Natural Gas Association of America, Natural Gas Supply Association, New England Power Generators Association, Inc., Northeast Energy and Commerce Association, Northwest & Intermountain Power Producers Coalition, PJM Power Providers Group, and Western Power Trading Forum in the "friends of the court" brief.
EPSA Merits Brief
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.