Shaping American Power: Federal Preemption and Technological Change

Posted: 3 Sep 2020

See all articles by Steven Ferrey

Steven Ferrey

Suffolk University Law School

Date Written: 1991

Abstract

This article predicted how a little-noticed Supreme Court decision would change American industry, and as of 2020, those earlier predictions had come true in fact. For more than half a century, Federal Power Act (FPA) created a demilitarized zone between competing federal and state jurisdiction over electric power regulation. Chronic legal friction between federal state regulatory authority erupted virulently over the construction of costly and unnecessary power plants during the 1980s. For America's most capital-intensive industry, a single decision can have a multi-billion dollar effect. In 1988 a divided United States Supreme Court expansively underscored the preemptive power of federal regulatory agencies. The Court's landmark decision, Mississippi Power & Light Co. v. Mississippi, conscripted state regulators to follow contemporaneous federal regulatory decisions.

This article charts the evolution of Supremacy Clause precedent and the culmination of a line of cases in the Mississippi Power filed rate doctrine. On its face, Mississippi Power addresses yesterday's electric power industry. At the same time, however, this decision sowed the seeds of radical change in a traditional, highly regulated industry.

In ways unanticipated by the Supreme Court majority, Mississippi Power will speed the transition to a more independent and decentralized future. The Supreme Court decision will promote a least-cost and environmentally more benign power supply. This article forecasts Mississippi Power's long-term impact on technical and regulatory growth by analyzing, in separate sections, the effect of the decision on traditional state utility regulation, the emerging independent power and Qualifying Facility sectors of the industry, and energy efficiency strategies now implemented in many states.

Mississippi Power will have three principal, unintended impacts. First, the decision will promote a technological shift to independent power generation: Hundreds of independent power projects will replace conventional electric utility plants by the year 2000 and after. Second, Mississippi Power leaves open the possibility of coextensive state and federal regulatory jurisdiction. Third, state actions will encourage the growth of unregulated, independent non-utility companies. These companies will come to dominate the independent power sector, thus fundamentally altering the future of electric power.

This article demonstrates how Mississippi Power had and will continue to have several profound, unanticipated impacts on the future of power in America. These impacts will endure because of the interaction of law, technology and regulation. Specifically, new technological alternatives will serve to subvert the preemption of state regulation that Mississippi Power dictates. State regulators will use these alternatives in order to reassert their currently preempted authority and these forces will transform the American power industry.

Suggested Citation

Ferrey, Steven, Shaping American Power: Federal Preemption and Technological Change (1991). Virginia Environmental Law Journal, Vol. 11, 1991, Available at SSRN: https://ssrn.com/abstract=3659967

Steven Ferrey (Contact Author)

Suffolk University Law School ( email )

120 Tremont Street
Boston, MA 02108-4977
United States

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