The Federal Energy Regulatory Commission (FERC) has released a policy statement declaring it has jurisdiction to “incorporate a state-determined carbon price in [wholesale] markets.”[1]

FERC released the policy statement following a virtual technical conference it held on September 30 on the subject of carbon pricing in wholesale electricity markets.[2] The conference covered a range of topics, including an overview of current carbon pricing mechanisms used by states and regional coalitions, as well as operational and design issues that may arise when incorporating a carbon price into a wholesale market structure.[3]

The conference also featured a panel on the legal implications of integrating carbon pricing into wholesale markets. There, as is so often the case with a novel legal issue, the threshold question was one of jurisdiction—specifically whether and under what authority FERC has jurisdiction to implement carbon pricing.[4] Answering that question in the affirmative, FERC has taken a significant step by signaling it will not reject carbon price proposals brought by states “out of hand.”[5]

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