Legal Challenges for 'Leaving It in the Ground:' Touchstone Developments and Holdings

Abstract

Renewable technologies are proven as an alternative mechanism for power production and their costs are rapidly decreasing. This allows the U.S. deliberately to leave climate-changing fossil fuels in the ground. Utilities in several states are now attempting to extend the life of certain fossil-fuel generating assets and pull more fossil resources from the ground, often using federal ISO wholesale markets to try to cross-subsidize these older plants. However, law is not yet structured to accommodate a system where fossil fuel power generation remains in the ground as the nation switches to solar and wind power.

While able to store fossil fuel energy that otherwise is used for electric power, there is an inability to store as electric energy the intermittent electricity produced by solar or wind power. Wind and solar power technologies both are intermittent and provide relatively unreliable electric power output for an electric grid that must have reliable supply to not collapse within a few seconds. This article showcases regulatory techniques to mitigate taking more fossil resources from the ground, comparing the economic trade-offs of this strategy. This article highlights legal aspects of how:

o New resources owned by independent power developers cannot legally be regulated by any state PUCs because they engage exclusively in wholesale, rather than retail, sales.

o The outline of “safe harbor” regulatory actions still within the state arsenal to promote new power generation technologies and leave more traditional fossil resources in the ground.