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Law360: PG&E's Ch.11 Brings Rift With FERC Over Power Deals

Posted by Keith Goldberg on Jan 29, 2019

Law360 looks at the conflict brought about by FERC’s edict that PG&E cannot drop any existing power purchase agreements without FERC's permission after the utility declared bankruptcy. AEE's Jeff Dennis weighs in. See excerpts below and the entire Law360 (for subscribers) story here:

The Federal Energy Regulatory Commission has touched off a "turf war" with bankruptcy courts by deciding Pacific Gas and Electric Co. can’t ditch any of its $42 billion worth of power purchase agreements without the regulator’s blessing, a fight with major implications for future clean energy development, experts say.

PG&E escalated the fight on Tuesday when, in connection with its Chapter 11 filing, it attacked FERC’s conclusion that it had jurisdiction over whether companies can drop existing wholesale PPAs. In an adversary complaint, PG&E requested an injunction from a California bankruptcy court that would block FERC from having a say over any wholesale power contracts that PG&E seeks to reject in bankruptcy.

"Those long-term PPAs are an important financial foundation to the development of power projects, including a lot of renewables projects," said Jeffery Dennis, a former FERC energy policy office director who is now general counsel for regulatory affairs at trade group Advanced Energy Economy. "The certainty of contracting PPAs is important for the electric industry in general to ensure projects get built…"

FERC said it has concurrent jurisdiction with the bankruptcy courts on whether PPAs can be shed, thanks to its broad Federal Power Act authority over wholesale electricity sales and contracts. But PG&E argued in its adversary complaint that bankruptcy courts have exclusive jurisdiction over the fate of contracts including PPAs under Section 365 of the Bankruptcy Code and that the FPA “on its face” doesn't give FERC any similar authority...

“FERC has put down its marker and said, 'We have a role here,'” Dennis said. “Even before we start to see what contracts will be targeted ... the bankruptcy court has the next move.”

 See the complete Law360 (subscription access) story here:

Topics: AEE In The News