Southern California Edison (CEERT)

121 Cal. App. 4th 1303, 2004 Cal. PUC LEXIS 1449 (August 31, 2004)

The Court of Appeal (Second District, Division 1) reversed a Commission Order that construed Section 399.25 to require public utility transmission providers to pay the up-front cost of network upgrades needed to ensure reliable delivery of independent generator output.  The Court did not, nor was it apparently asked to, examine the merit of the Commission’s construction of Section 399.25.  Rather, the Court agreed with Edison that the Federal Energy Regulatory Commission (“FERC”) had occupied the field of regulation related to cost recovery for such interconnections.  While the Court agreed that general law embraces a presumption against implied federal preemption, the Court observed that the presumption does not apply when the state “regulates in an area where there has been a history of significant federal presence.”  Indeed, in other portions of the opinion, the Court appears to place great weight on the fact that, by contrast to transmission line siting or local service issues, the financial aspects of interconnection agreements did not seem to fall within traditional state regulation.  Notably, the Court concluded that because Edison alleged “field” preemption rather than “conflict” preemption, the Court was not required to determine whether Section 399.25 (as construed by the Commission) actually conflicted with the FERC order.  (The Commission sought review of the Order in the California Supreme Court, but review was denied.)

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