Consolidated Edison Company of New York, Inc. v. Public Service Commission of New York

Background

A large New York electric utility challenged a state law that requires utilities to pay at least six cents per kilowatt-hour to qualifying small power producers. The utility said it should not have to pay that minimum when its own avoided cost was lower. Lower New York courts disagreed, with one court striking down the higher portion and the New York Court of Appeals upholding the state rule; a Kansas court reached the opposite result.

Reasoning

The central question was whether a State may require utilities to pay more than the federal “full avoided cost” rate that the Federal Energy Regulatory Commission (FERC) set under a federal law called PURPA. The Supreme Court did not answer that question. Instead, the Court dismissed the appeal for want of a substantial federal question and declined to decide the merits, leaving the state-court outcome in New York undisturbed and not resolving the conflict between state courts.

Real world impact

Because the Court dismissed the case rather than ruling on how federal law applies, New York’s six-cent minimum remains effective for now. Utilities and small power producers in New York must follow the state rule unless it is later changed or reviewed. The decision does not create a nationwide rule, so other States with different approaches may continue to face similar disputes.

Dissents or concurrances

Justice White, joined by Justice Blackmun, dissented. He argued the federal question was important and unsettled, described PURPA and FERC’s avoided-cost standard, and explained that conflicting state decisions and many state laws make the issue likely to recur and worthy of review.