The fight over “Energy Choice” or “retail electricity market deregulation” in Nevada demonstrated a disagreement about how to structure electricity markets, economic consequences in the billions of dollars, and thorny legal doctrines like the Dormant Commerce Clause and dual sovereignty. The Energy Choice Initiative was the first attempt to deregulate a state’s retail electricity market by ballot initiative and the first include a right to “Energy Choice.” The Energy Choice Initiative is one example of the growing interest in retail customer choice or “Energy Choice” across the country. In the past two years, Virginia and Arizona considered retail customer choice and the deregulation of their electricity markets. This Article will discuss Nevada’s novel constitutional amendment, the Energy Choice Initiative, that proposed to deregulate Nevada’s energy market and the legal and policy implications of the contemporary electricity deregulation movement in the United States. Specifically, this Article will explore the ramifications of deregulation on the extraterritoriality of the Dormant Commerce Clause and energy federalism.
First, this Article will discuss Nevada’s response to the two most recent attempts to deregulate their retail electricity market. The first attempt occurred in the 1990s as a component of the broader deregulation movement going on at that time through bills passed by the Nevada State Legislature that were then repealed by the Governor. The second attempt began in 2016 where the Energy Choice Initiative ballot was rejected by Nevadans in 2018. Additionally, this Article examines the relevant case law regarding the duties of the Federal government, the ability of the states to regulate their energy markets, and the considerations that policymakers should understand when considering energy market restructuring. Finally, an analysis of the potential benefits and risks of energy deregulation is included to exemplify the differences between state and federal jurisdiction.
To resolve federalism energy disputes over jurisdiction the courts should recognize that: (1) the extraterritorial doctrine of the commerce clause is outdated and inappropriate, and (2) concurrent jurisdiction better serves the modern energy market than the traditional doctrine of dual sovereignty. First, this comment will join the chorus of scholars and judges who seek to eliminate the extraterritoriality doctrine in favor of the Pike balancing test. Second, Part VI(A) argues that the resolution of energy federalism disputes requires the flexible mindset of “cooperative federalism.” The Pike balancing test and “cooperative federalism” would both support the ability of states to experiment while increasing federal oversight. The elimination of the extraterritoriality doctrine of the commerce clause could allow for state innovation. Similarly, concurrent jurisdiction would enable cooperative federalism that would expand, or contract jurisdiction based on factual and pragmatic considerations. In conclusion, the analysis of energy market regulation in Nevada and the United States will demonstrate that the future of energy federalism is dependent upon the court’s commerce clause jurisprudence and the balance of state and federal power.
Joel A. Kaufmann,
Nevada's Energy Choice Initiative: A Case Study of Deregulation, the Dormant Commerce Clause, and Energy Federalism,
San Diego J. Climate & Energy L.
Available at: https://digital.sandiego.edu/jcel/vol13/iss1/7