The ruling bars regulators from enforcing Senate Bill 1938, a 2019 law that blocked power companies that don’t already own transmission within Texas from building lines inside the state that form part of multi-state electricity grids.
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Out-of-state transmission companies can now compete to build lines inside parts of Texas, under an Oct. 28 court ruling.
Rendered by U.S. District Judge Robert Pitman in Austin, the ruling bars regulators from enforcing Senate Bill 1938, a 2019 law that blocked power companies that don’t already own transmission within Texas from building lines inside the state that form part of multi-state electricity grids. Two such multi-state grids — the Midcontinent Independent System Operator and the Southwest Power Pool — extend into the Lone Star State.
Florida-based NextEra, which owns thousands of miles of transmission lines outside of Texas, sued after regulators barred it from building a segment near the Texas-Louisiana border. LS Power’s LSP Transmission Holdings II also joined the suit.
In his ruling, Pitman concluded that SB 1938 violates the U.S. Constitution’s Commerce Clause by interfering with interstate commerce. He also cited a 5th U.S. Circuit Court of Appeals decision from 2022 that had reversed an earlier dismissal of the case by Pitman. The New Orleans-based appeals court had found that the “very terms of SB 1938 discriminate against interstate commerce,” according to reports.
However, the appeals court also left Pitman to decide whether state attorneys could otherwise justify the law. Pitman found that they could not, and as such, the Public Utility Commission is now under a permanent injunction blocking the enforcement of SB 1938.
The case is NextEra Energy Capital Holdings v. Paxton, U.S. District Court for the Western District of Texas, No. 19-cv-626