Zombie Energy Laws

50 Pages Posted: 7 May 2020 Last revised: 22 Dec 2020

See all articles by Joshua Macey

Joshua Macey

University of Chicago Law School

Date Written: April 12, 2020

Abstract

This Article traces the development of three legal rules—cost
recovery for vertically integrated utilities, the requirement that regulators
assess the financial viability of energy projects before issuing a certificate of
public convenience and necessity, and the filed rate doctrine—that emerged
out of the view that electric power companies should be shielded from
market forces. It argues that important elements of these legal rules have
become “zombie energy laws.” Zombie energy laws are statutes, regulations,
and judicial precedents that continue to apply after their underlying
economic and legal bases dissipate. Zombie energy laws were originally
designed to protect consumers by, among other things, preventing utilities
from exploiting their market power. Today, however, they protect incumbent
fossil fuel generators and have provided the legal basis for invalidating
billions of dollars of wind and solar projects. Thus, energy laws that
emerged to mitigate market power abuses under the old system of utility rate
regulation now entrench incumbent market power and are impeding the
transition to a cleaner energy system. In this way, zombie energy laws are
protecting incumbent energy companies from traditional tort, contract, and
antitrust laws that prevent firms operating in ordinary industries from
acting anticompetitively.

This Article concludes by arguing that the Federal Power Act, which
instructs the Federal Energy Regulatory Commission to maintain “just and
reasonable” wholesale rates, can plausibly be read to mitigate—and, in
some cases, eliminate—the market distortions caused by zombie energy
laws. The Act’s meaning should be construed to fit the market structure to
which it is being applied.

Keywords: energy law, environmental law, administrative law, natural resources, antitrust

Suggested Citation

Macey, Joshua, Zombie Energy Laws (April 12, 2020). Vanderbilt Law Review, Vol. 73, 2020, Cornell Legal Studies Research Paper No. 20-21, Available at SSRN: https://ssrn.com/abstract=3573885

Joshua Macey (Contact Author)

University of Chicago Law School ( email )

1111 E 60th St
Chicago, IL 60637
United States

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