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A Texas law banning new transmission companies may violate the US Constitution

The U.S. Court of Appeals for the Fifth Circuit ordered a lower court to allow previously rejected testimony in a lawsuit against the Public Utility Commission.

AUSTIN, Texas — A 2019 Texas law regulating electricity transmission projects may violate the U.S. Constitution's Commerce Clause, a federal ruling shows.

NextEra Energy sued Texas following a 2019 law that banned new transmission companies in the state. 

Transmission lines send power across long distances. It’s how distant power plants and wind farms can power homes in Central Texas.

NextEra won a bid to build the Hartburg-Sabine transmission line. The line would carry the current between Hartburg, Texas, and Sabine, West Virginia.

In 2019, lawmakers stopped the project by passing Senate Bill 1938. SB 1938 prohibits new transmission companies from building in Texas.

“SB 1938 will codify the existing process in Texas for determining the proper party to construct critical energy infrastructure, maintain Texas rate jurisdiction over transmission in the non-ERCOT areas of Texas, and clean-up statutory remnants of the Competitive Renewable Energy Zone (CREZ) buildout,” the Statement of Intent shows.

CREZ connects wind energy in West Texas to cities in Central and North Texas.

“Electric utilities in Texas have established geographic footprints, and this bill would ensure the geographic continuity of the system in a way that further facilitates reliability,” the SB 1938 author/sponsor’s state of intent shows. 

“The incumbent-protecting, Texas-only policy of SB 1938 resembles the Texas-only power strategy seen in the ERCOT region, which resulted in catastrophic power failures and an energy crisis that could occur elsewhere if SB 1938 is allowed to impact interstate projects,” NextEra’s court filings show.

Most of Texas is on its own power grid managed by the Electric Reliability Council of Texas (ERCOT).

Credit: PUC

Three other interconnections operate within the state.

Southwest Power Pool (SPP) covers most of the Texas Panhandle. Western Electricity Coordinating Council (WECC) connects El Paso to the western half of the U.S. Some of East Texas uses the Midcontinent Independent System Operator (MISO) grid.

NextEra’s transmission line would be built in Texas, but outside the ERCOT market and not impact the independent Texas grid.

RELATED: 'These are our homes. This is our land.' | How Texas power regulators must balance landowner rights and public benefit

Since the project crosses state lines, NextEra argues that SB 1938 violates the U.S. Constitution’s Commerce Clause.

“SB 1938 impedes the identification and construction of needed transmission lines that would improve the resiliency and reliability of interstate power grids,” NextEra’s court filing shows.

The Court of Appeals for the Fifth Circuit issued a judgment Wednesday.

“What is true for alcohol and milk under the dormant Commerce Clause must be true for electricity transmission,” the Court’s opinion shows.

The Court ordered the lower court to rehear the case.

“Imagine if Texas — a state that prides itself on promoting free enterprise — passed a law saying that only those with existing oil wells in the state could drill new wells. It would be hard to believe,” the court opinion shows.

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