The Federal Energy Regulatory Commission (“FERC” or the “Commission”) issued an order on May 1, 2019 denying rehearing of its orders asserting concurrent jurisdiction with a bankruptcy court over wholesale power contracts.
In January, prior to Pacific Gas & Electric (“PG&E”) filing for bankruptcy, NextEra Energy, Inc. and Exelon Corporation both filed complaints and petitions for declaratory orders from FERC, requesting that the Commission find that PG&E could not abrogate, amend, or reject in a bankruptcy proceeding any rates, terms, and conditions of its FERC-jurisdictional wholesale power contracts without first obtaining approval from the Commission. The Commission quickly issued a brief order holding that a party to a FERC-jurisdictional wholesale power contract must obtain approval from both the bankruptcy court and the Commission to reject a contract and modify the filed rate, respectively. PG&E then filed its petition for bankruptcy and initiated an adversarial proceeding against FERC, requesting preliminary and injunctive relief. That matter has continued to play out in the Northern District of California and there has not yet been a resolution by the bankruptcy court. Meanwhile, PG&E requested rehearing of the Commission’s decision. The Commission’s order on rehearing offers a more in-depth analysis of its jurisdiction.
The order first highlights the distinct roles that FERC and a bankruptcy court play in evaluating wholesale power contracts. While FERC’s role is to protect the public interest, the bankruptcy court’s role is to provide a path to rehabilitate debtors. The Commission held that the existence of bankruptcy proceedings does not alter its obligation, and exclusive authorization, to consider whether wholesale rates are just and reasonable. Continue Reading