Justices ask government for input on Texas electric grid dispute

Illustration shows NextEra Energy logo
Miniatures of windmill, solar panel and electric pole are seen in front of NextEra Energy logo in this illustration taken January 17, 2023. REUTERS/Dado Ruvic/Illustration
  • Dispute centers on Texas law favoring utilities in the state
  • 5th Circuit last year said law was discriminatory

March 6 (Reuters) - The U.S. Supreme Court on Monday asked the Biden administration to wade into a dispute between Florida-based energy company NextEra Energy Inc. and Texas over a state law that experts say could block the construction of vital interstate electric transmission lines.

The Supreme Court is deciding whether to take up the state's appeal of a ruling that the 2019 law, which gives electric utilities already operating in the state the right of first refusal to build proposed transmission projects, is discriminatory and presents an undue burden on interstate trade.

Texas argued in its December petition to the high court that regulating public utilities is a key responsibility for states and that it is reasonable for regulators to stipulate a preference for companies that already have a footprint there.

Representatives for the U.S. Department of Justice, NextEra and Texas didn't immediately respond to requests for comment Monday.

NextEra, which owns thousands of miles of transmission lines in multiple states but no such assets in Texas, challenged the law in court in 2019 after it was barred from building a segment of an interstate transmission line near the Texas-Louisiana border. The company argued the law is discriminatory and undercuts competition for contracts from out-of-state developers in violation of the U.S. Constitution's Dormant Commerce Clause.

The 5th U.S. Circuit Court of Appeals in August said the state's law likely violated the clause and sent the case back to a Texas federal court for further consideration.

The Justice Department has been asked twice before to weigh in on disputes over similar state laws and has in both cases urged courts to find Commerce Cause violations, according to Ari Peskoe, the director of the Electricity Law Initiative at Harvard Law School.

The case is Peter Lake et al. V. NextEra Energy Capital Holdings, U.S. Supreme Court, case No. 22-601.

For Texas: Judd Stone of the Texas Attorney General's Office

For NextEra: Jeffrey Tillotson of Tillotson Johnson & Patton and Stuart Singer, Jason Hilborn and Pascual Oliu of Boies Schiller Flexner.

Reporting by Clark Mindock

Our Standards: The Thomson Reuters Trust Principles.