Court Rules Against FERC in $42 Billion Jurisdictional Dispute Over PG&E Bankruptcy

The U.S. District Court for the Northern District of California on March 11 ruled that the bankruptcy code is adequate to decide the future of Pacific Gas & Electric Company’s wholesale power purchase contracts. The Federal Energy Regulatory Commission claimed that the agency has concurrent jurisdiction with bankruptcy courts over wholesale contracts that the utility may seek to reject through bankruptcy. The court declined FERC’s move to withdraw the jurisdictional dispute from the bankruptcy court. PG&E’s FERC-regulated agreements represent contractual commitments of about $42 billion, according to the utility’s court filings.

In a Jan. 25 order, FERC determined that it shared jurisdiction with the bankruptcy court in response to a request by NextEra Energy Inc. and NextEra Energy Partners L.P seeking commission action to protect their power purchase agreements with PG&E in anticipation of the bankruptcy petition.

PG&E filed to reorganize under Chapter 11 of the U.S. bankruptcy code to deal with billions of dollars in potential liability associated with the 2017 and 2018 Northern California wildfires. The utility also sought an injunction against FERC’s assertion. FERC retaliated, requesting the Northern District Court to withdraw the reference to the bankruptcy court.

The case is PG&E Corporation, et al v. Federal Energy Regulatory Commission (4:19-cv-00781-HSG)