FERC Reaffirms Jurisdiction Over $42 Billion Power Contracts in PG&E Bankruptcy

The Federal Energy Regulatory Commission on May 1 denied Pacific Gas and Electric Company’s requests for rehearing of the agency’s order asserting concurrent jurisdiction with bankruptcy courts over wholesale contracts that the utility may seek to reject through its Chapter 11 filing. While FERC’s role in evaluating rates and terms of power contracts is to protect the public interest, the bankruptcy court’s role is to provide a path to rehabilitate debtors. The agency said that two are distinct roles, concluding that a bankruptcy court’s authorization to reject a contract does not relieve the debtor’s obligations under the Federal Power Act.

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.

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.

The U.S. District Court for the Northern District of California, in a March 11 ruling, 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.