Tag Archives: Energy Law
Sep 26, 2025 Felix MormannLexEnergy Law
It is all but impossible for government to adopt industrial policies and regulations without creating winners and losers. The Obama administration’s support, for example, turned Tesla, SolarCity, and other cleantech ventures into regulatory winners, while its “war on coal” relegated fossil fuel companies to regulatory losers. The first Trump administration sought to reverse this trend by dialing back clean energy policies and using emergency powers to prop up the nation’s ailing coal industry. And the regulatory pendulum has continued swinging back and forth during the Biden presidency and under Trump 2.0. When changes in policy and regulation interfere with corporate interests, regulatory losers are quick to call foul and demand compensation for their regulatory burdens. But what about those who find themselves on the losing end not by virtue of regulatory activism and change but, rather, due to a persistent lack of regulation? In his excellent new article, Compensating Regulatory Losers, professor Todd Aagaard asks this provocative question and develops thoughtful answers drawing on case studies from climate and energy regulation, among others.
A robust literature grapples with the question of whether and when regulatory losers deserve to be compensated. Some have attempted to frame and answer this question based on the welfare impacts of regulation, while others have turned to (other) notions of fairness in search of answers. Some scholars advocate for replacing regulation-specific compensation with more comprehensive redistribution programs carried out via income taxes. Libertarian entitlement theorists, meanwhile, argue that regulatory losers should be compensated when their reliance expectations are thwarted by changes in regulation. And if fairness arguments do not sway you, leave it to economists to reframe the debate along Pareto and Kaldor-Hicks efficiency metrics. Continue reading "Should Government Pay Victims of Regulatory Inaction?"
Feb 15, 2024 Felix MormannLexEnergy Law
Electricity is the lifeblood of America. Automotive manufacturing in Detroit, server farms in Silicon Valley, the heating and cooling of our homes, and the charging of our smart devices all depend on the availability of affordable and reliable electric service. Electricity, in other words, is as vital to our economy and lifestyle as the air we breathe is to our survival. At the same time, the way we generate, transmit, and use electric power directly impacts, often adversely so, the quality of our air and water, exacerbates global climate change, and causes deadly wildfires, among other societal impacts. Given the complexity of the electric grid and its many interactions with social welfare and the public interest, one might expect Public Utility Commissions (PUCs) to provide comprehensive oversight to address and regulate these interactions. Most do not.
In his excellent new article, Precautionary Ratemaking, professor Jonas Monast makes a compelling case for PUCs to become more proactive regulators of the wide-ranging risks associated with electric utilities’ actions. The article urges utility commissioners to interpret their regulatory mandate beyond the traditional confines of economic regulation and least-cost electric service to include risk analysis and management according to the precautionary principle that underpins much of modern environmental law. Continue reading "Public Utility Regulation Through the Lens of Risk Management"
Oct 28, 2022 Felix MormannLexEnergy Law
In February of 2021, winter storm Uri wreaked havoc in Texas. Temperatures that would barely raise an eyebrow in the upper Midwest or Northeast caused two in three Texans to lose power, often for days. Water supply systems and other electricity-dependent essential services collapsed in Austin and elsewhere, some taking weeks to come back online. Hundreds died, and the storm’s disruptive impact on the local economy caused billions of dollars in damages. Texas Governor Greg Abbott and other politicians were quick to blame the state’s solar and wind generators for the widespread blackouts. Closer scrutiny, however, soon revealed that outages at fossil-fuel plants, not their renewable counterparts, were the primary cause of cascading blackouts. In fact, local solar and wind generators performed significantly better throughout Uri than the Lone Star State’s natural gas-fired power plants.
In their excellent new article, Grid Reliability Through Clean Energy, professors Alexandra Klass, Joshua Macey, Shelley Welton, and Hannah Wiseman draw on the Texas experience to debunk the common misconception that grid reliability and clean energy are at odds with one another. On the contrary, the authors argue, “the only way to secure a reliable grid under conditions of climate change is to rapidly engage in a clean-energy transition in the electricity sector.” (P. 978.) After all, global warming and other manifestations of our changing climate increase both the frequency and severity of extreme weather events like winter storm Uri. Sure, grid operators could weatherize coal and natural gas-fired power plants as well as their fuel supply to keep them running longer. But to do so would also increase the power sector’s greenhouse gas emissions, exacerbating reliability threats from climate change. Continue reading "The Long and Winding Road to a Cleaner, More Reliable Power Grid"
Aug 20, 2021 Felix MormannLexEnergy Law
Madison Condon,
Externalities and the Common Owner, 95
Wash. L. Rev. 1 (2020), available at
SSRN.
At Chevron’s 2020 annual meeting, a majority of voting shareholders approved a resolution urging the oil giant to bring its lobbying efforts in line with the Paris Climate Agreement’s goal of limiting global warming to two degrees Celsius. What seemed like a pipe dream not long ago has become a fixture on Wall Street. Climate activism has emerged as a dominant theme at shareholder meetings in the energy sector and beyond, with some resolutions receiving nearly sixty percent of votes. In her excellent article, Externalities and the Common Owner, Professor Madison Condon draws on modern portfolio theory to offer an intriguing explanation for the changing tide in shareholder climate activism.
In recent years, concerned shareholders have garnered majority approval for resolutions calling for corporate emission reduction targets, better disclosure of climate risk, and suspension of lobbying against carbon regulation, among other climate action – often against the vocal opposition of the company’s own board. This surge in shareholder support for climate-related proposals is likely the product of a multitude of factors, including the growing sense of urgency surrounding global climate change. Professor Condon makes a compelling case that a key driver of shareholders’ newfound love for climate activism may be a paradigm shift in the approach of institutional investors to corporate governance. Continue reading "Deconstructing Shareholder Climate Activism: Why Institutional Investors Are Bullying Carbon Majors"
Jun 19, 2020 Felix MormannLexEnergy Law
David B. Spence,
Regulation and the New Politics of (Energy) Market Entry, 95
Notre Dame L. Rev. 327 (2019), available at
SSRN.
A burgeoning literature explores the siting challenges, equity issues, and justice concerns associated with energy project development. The important role that NGOs like the Sierra Club, 350.org, or the Environmental Defense Fund play in the ensuing conflicts is widely acknowledged, yet the dynamics of NGO mobilization are relatively underexplored. Professor David Spence’s fine article, Regulation and the New Politics of (Energy) Market Entry, goes a long way toward closing that gap, offering critical insights into NGO strategy, framing, and coordination.
Professor Spence starts by laying out the tensions resulting from the U.S. energy economy’s reliance on private investments to build and maintain the infrastructure necessary to meet the American public’s demand for energy services. These investment decisions are guided by statutes and regulations that reflect the evolving prioritization among three fundamental objectives that make up the so-called energy trilemma: affordability, reliability, and environmental performance. Historically, the first two objectives dominated but, more recently, climate change and other environmental prerogatives have emerged as the driving forces behind much energy investment. Continue reading "The Internet of Beliefs and Strategies: How NGOs Fight Energy Projects in a Digitally Connected World"
May 16, 2019 Felix MormannLexEnergy Law
Reading Professor William Boyd’s fine piece, Just Price, Public Utility, and the Long History of Economic Regulation in America, I couldn’t help but think of Jostein Gaardner’s international bestselling novel Sophie’s World. To be clear, there’s no teenage girl in Boyd’s essay receiving letters from a mysterious stranger that enlighten her on the history of philosophy (or, in Boyd’s case, economic regulation). But, like Gaardner, Boyd does an outstanding job of bringing to life and making accessible what many might otherwise consider a dense, perhaps even tedious subject matter—the history of price regulation. And unlike Gaardner, Boyd manages to do so with remarkably little sacrifice in breadth and depth of coverage.
Professor Boyd’s essay takes readers on an intriguing journey through time, tracing the doctrine of “just price” all the way back to the Aristotelian concept of corrective justice, devoted to preserving equality in exchange, commonly understood as an arithmetic proportion around a mean. From ancient Greece, readers are guided to medieval Italy where Thomas Aquinas and other Scholastics expanded Aristotle’s framing into the notion of commutative justice, a construct intended to encompass the full range of voluntary and involuntary interpersonal relationships, including but not limited to economic exchange. Continue reading "William’s World: An Essay About the History of Just Price"
Apr 18, 2018 Felix MormannLexEnergy Law
Shelley Welton,
Clean Electrification, 88
U. Colo. L. Rev. 571 (2017), available at
SSRN.
Climate change has made the timely decarbonization of the electric grid a top priority for policymakers in the United States and across the globe. In the absence of a meaningful price on carbon, net metering, tax credits, and other incentive programs dominate the low-carbon policy landscape. Critics of clean energy incentives have long argued that government should not engage in the business of picking winners and losers among competing technologies. With her thoughtful article, Clean Electrification, Professor Shelley Welton reminds us that public policy support for a low-carbon energy economy has disparate impacts not only on technologies but also on ratepayers, utilities, and other stakeholders.
U.S. policymakers increasingly seek to enlist ratepayers in the war on carbon, harnessing technology innovation to turn previously passive electricity customers into active partners in grid decarbonization efforts. This vision of a “participatory grid” rests on smart appliances, rooftop solar, energy storage, and other technologies capable of empowering ratepayers to more actively manage their energy consumption, generation, and other grid interactions. Access to these technologies and, hence, to the benefits of active grid participation, however, comes at considerable cost raising concerns over the vision’s implications for distributional equity, as evidenced by “solar fairness” debates across the country. Continue reading "Clean Electricity for the People by the People"
Jul 4, 2016 Felix MormannLexEnergy Law
Today’s electricity sector has little in common with the industry’s humble origins in the late 1800s, when small power plants located every ten blocks or so served nearby customers through a local grid. Nor does it share many commonalities with the heavily regulated, largely monopolized electricity sector of the 1930s, whose interstate grid prompted passage of the 1935 Federal Power Act. And yet, this more than eighty-year-old statute continues to define the requirements and scope of federal and, indirectly, state regulatory authority over today’s electricity sector. As deregulation and competitive markets, the rise of renewable energy, smart metering, and demand response transform the way electricity is generated, traded, transmitted, and used, regulators and courts are struggling to apply the Federal Power Act to a changing industry.
Earlier this year, the Supreme Court offered its views when, in Federal Energy Regulatory Commission v. Electric Power Supply Association, the Court recognized federal authority to regulate wholesale market operators’ compensation of demand response—temporary reductions in electricity consumption by end-users at times of peak demand. In his thoughtful article FERC’s Expansive Authority to Transform the Electric Grid, Professor Joel B. Eisen places FERC v. EPSA in historical context, proposes a set of principles to guide FERC’s regulation of rules and practices that affect rates in wholesale power markets, and applies these principles to a hypothetical carbon price added to fossil-fueled electricity. Continue reading "Empowering Federal Regulation for a Changing Electricity Sector"
Dec 18, 2015 Felix MormannLexEnergy Law
In a 2013 report, the American Society of Civil Engineers awarded the U.S. electricity grid the grade “D+” noting that aging components and limited maintenance contribute to a growing number of brownouts and blackouts. Indeed, the 450,000 miles of high-voltage transmission lines that connect America’s nearly 7,000 power plants with some 6 million miles of lower-voltage distribution networks are based on a grid architecture that dates back to the 1880s. The average transformer in the national power grid is 42 years old and, hence, two years past its projected useful life. Every year power outages cost the economy billions of dollars in lost output and wages, spoiled inventory, production delays, among others. Meanwhile, successful mitigation of global climate change urges the transition to a low-carbon energy economy fueled by solar, wind, and other renewables. But the best renewable resources are often located far from population centers, such as wind resources in the upper Midwest and Plains states or solar resources in the desert southwest. As a result, the U.S. electricity grid requires both modernization and expansion calling for $1 trillion of investment to maintain even current levels of grid reliability. In Revitalizing Dormant Commerce Clause Review for Interstate Coordination, professors Alexandra B. Klass and Jim Rossi take stock of the regulatory impediments to upgrading and expanding the electricity grid, and propose a fresh take on dormant Commerce Clause review to incentivize greater interstate coordination on long-distance transmission projects.
Notwithstanding the vast macroeconomic benefits of an upgraded and expanded electric grid, transmission lines remain highly unpopular and subject to strong “not-in-my-backyard” reactions – at the individual and institutional level alike. Drawing on a series of precedents, professors Klass and Rossi illustrate how states use their virtually exclusive authority over electric transmission line siting and eminent domain to block and, ultimately, defeat interstate transmission projects. “In the context of multi-jurisdictional energy infrastructure projects, a single state or local holdout can keep an infrastructure project from going forward.” Such regulatory holdouts are especially popular among “pass-through” states that often struggle to identify benefits to local constituents from transmission lines that originate and end out-of-state. In the words of Klass and Rossi, “interest group dynamic[s] along with many existing siting and eminent domain laws enable, and may even encourage, these kinds of state and local government holdouts.” Continue reading "A Dormant Commerce Clause Approach to Interstate Electricity Transmission"
Oct 9, 2015 Ezra RosserLexEnergy Law
Professor Oliver Houck’s recent article, The Reckoning: Oil and Gas Development in the Louisiana Coastal Zone, is easily one of the best articles that I have read in the last ten years and should be required reading regardless of one’s specialty. I should admit that I am not an environmental law professor and the environmental law articles I ordinarily read are those that intersect with one of my primary research areas: Indian law. So I initially downloaded The Reckoning expecting that I would skim it quickly. But it is a remarkable article. Although on its face, the article tells a story of oil and gas development in the fragile wetlands of Louisiana’s coast, it also has lessons about political corruption and short-sightedness that extend far beyond the environmental destruction at the heart of the article.
Professor Houck convincingly argues that the state government and oil and gas interests are seen as essentially the same, so much so that Houck refers to them collectively simply as “the company.” Louisiana actively courted oil and natural gas development to such an extent that the very state entities tasked with protecting the coastal zone participated in the promotion of development above all else, even above reason. As the article shows, it would be inaccurate to say that the state became the puppet of corporate interests or that it rubber-stamped the web of canals that destroyed the wetlands because nearly every Louisiana institution was and is invested in the rush to please big energy. Problematically, the list of those involved in opening up the wetlands, in denying the connection between development and destruction, and in attempting to shift the restoration costs away from oil and gas companies and unto the American taxpayer includes not only the ironically named Louisiana Department of Natural Resources, which time and again saw itself as an industry partner, but also parish governments, state-university academics and centers, politicians at the federal, state, and local levels, and even major environmental groups. As Professor Houck shows, no part of the Louisiana coast has been spared from devastation caused by “the company,” yet “the company” is unwilling to take responsibility and has largely succeeded in avoiding the costs associated with such destruction. Continue reading "A Story Well Told"
