Dive Brief:

The Federal Energy Regulatory Commission final week reasserted jurisdiction over power contracts held through California utility Pacific Gas and Electric, arguing that a bankruptcy court cannot unilaterally invalidate them.
PG&E final month requested a federal bankruptcy courtroom to prevent FERC from enforcing the phrases of more than 380 electricity buy agreements (PPAs) that it can need to go out as part of Chapter eleven intending. FERC argued Friday it needs to one after the other win approval from the corporation to alter the settlement phrases.
PG&E’s stock rose Tuesday on analyst reports that a legislative deal may additionally soon be reached to prop up the employer, but the phrases of its financial ruin and corporate reorganisation are but to be determined.

Dive Insight:

FERC’s Friday filing is the trendy instalment inside the jurisdictional tussle the various employer, PG&E and independent energy manufacturers over who has final say over the utility’s power contracts.

Last month, just before PG&E filed for Chapter 11 protections, independent turbines Exelon and NextEra asked FERC to maintain the PPA that they had signed with PG&E.

PG&E holds 387 PPAs with greater than 350 companies worth approximately $ forty-two billion, in step with courtroom files. Generators are involved PG&E will try and exit some of its older, extra luxurious renewable strength contracts to cut its liabilities within the financial ruin intending.

FERC in late January sided with the turbines, putting forward that it has “concurrent jurisdiction” over the contracts, along with the bankruptcy courtroom in California.

“These agreements are nonetheless situation to the Commission’s jurisdiction, and the Commission keeps discretion to exercising its authority,” the enterprise wrote in its response to Exelon and NextEra.

PG&E replied using asking the court for an injunction in opposition to FERC’s announcement of authority. While the software has no longer decided whether to exit contracts, market conditions require that it “comprehensively check how each PPA fits in the [its] power portfolio,” it wrote.

“Simply placed, Congress has now not given FERC a part to play when permitting a debtor to reject contracts in its taken into consideration enterprise judgment,” the utility wrote.

FERC’s today’s filing takes that argument to challenge with the aid of extending the organisation’s announcement of concurrent jurisdiction. Even if the bankruptcy courtroom permits PG&E to exit a few contracts, FERC argued that could no longer affect the organisation’s authority over strength rates set in the settlements.

“If [PG&E officials] determine to reject PPAs under financial disaster regulation, they’re launched handiest from their contractual obligations, now not their regulatory responsibilities to hold to buy strength on the filed fees,” lawyers for FERC wrote.

If PG&E desires release from its duty to buy energy at quotes laid out in its PPAs, it needs to not simplest convince the financial ruin courtroom to reject the contracts, but additionally “one at a time are seeking for a change of the filed charge earlier than FERC.”

“Once authorised with the aid of FERC, the responsibility to conform with contractual terms ‘springs from the Commission’s authority, not from the regulation of private contracts,'” FERC attorneys wrote, quoting a 1952 Supreme Court case. “Thus, a party’s responsibility to conform with the filed fee underneath the [Federal Power Act] stands separate and aside from its contractual duties with its counterparty.”

The jurisdictional dispute and PG&E financial disaster case are presently being heard with the aid of Judge Dennis Montali of the U.S. Bankruptcy Court in San Francisco. The next hearing on the jurisdictional dispute is Feb. 27.

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