Pop The Cork, Then Pull The Plug

Michael Giberson

The Supreme Court decision on interstate wine shipments (see Lynne’s comment for links) is a big win for interstate commerce, a boon to wine consumers, and a boost to boutique wineries across the country. Producers and consumers should celebrate tonight by popping the cork on their favorite sparkling wine.

And may I suggest to the pro-consumer advocates of interstate commerce that they next seek to pull the plug on policies that prevent energy consumers from bypassing local gas and electric utilities.

Canvassing the history of state regulation of liquor before the Amendment was passed and after, the Court concluded that the Amendment “does not supersede other provisions of the Constitution and, in particular, does not displace the rule that states may not give a discriminatory preference to their own producers.” […]

Justice Kennedy’s opinion tartly reminded the states that the Court, “time and again,” had ruled that, “in all but the narrowest circumstances, state laws violate the Commerce Clause if they mandate differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.”

In soaring rhetoric, Kennedy said that preserving cross-country access to consumers was “essential to the foundations of the Union,” citing the Federalist Papers, and the work of James Madison. The opinion said that it was a “central concern” of those who wrote the Constitution in the beginning to preserve economic access without individual state trade barriers. Indeed, this was “an immediate reason for calling the Constitutional Convention…” (via SCOTUSblog)

Next time a state law or regulation impedes a retail energy customer who wants to connect to someone other than the state-approved monopoly gas or electric utility, tell the state it is infringing on constitutional rights to engage in interstate commerce.


4 thoughts on “Pop The Cork, Then Pull The Plug

  1. But what if the customer and the utility are in the same state? Is it sufficiently interstate for the utility to get its wholesale power (or some portion of it) from out of state? If that’s a bypass trigger, couldn’t that induce utilities to seek out in-state wholesale power? That could harm liquidity in wholesale markets.

    Sorry to be a sourpuss, because as you know I am a strong advocate of retail choice, including the right to choose not to be served by the local utility.

  2. Electric power flows are famously not respecters of contract paths or political boundaries, and if a utility is part of the Eastern Interconnection or the Western Interconnection in the United States, then they are pretty clearly involved in interstate commerce. (Consumers in ERCOT, on the other hand, may have a harder time making the case.)

    But in any case, the important issue isn’t where the utility buys its power, but who the energy consumer wants to to deal with. A retail energy consumer seeking to buy from anyone involved in interstate commerce should fall under the protection of the commerce clause.

    The wine case result is not quite strong enough for all that I’d like. In the wine case, it was discriminatory treatment of out-of-state retailers that triggered the Court’s action; states that ban both in-state and out-of-state direct shipments to retail customers were not directly affected.

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