Pacific Gas & Electric Company (PG&E) has filed a response to NextEra’s move to protect its power purchase agreements (PPA) at the Federal Energy Regulatory Commission (FERC) from PG&E’s pending Chapter 11 filing.
On Tuesday, ConEdison submitted support for NextEra’s position with its own filing at FERC requesting similar protection for its 665 MW spread across 15 solar projects selling to PG&E via power contracts. ConEdison’s filing noted that PG&E has more than 9.6 GW of PPAs with 88 different wholesale sellers
PG&E gave a three pronged response in the filing, Answer to Complaint of Pacific Gas and Electric Company to January 18, 2019 Complaint by NextEra Energy, Inc., et al. under EL19-35 (FERC.gov), suggesting that the NextEra request ought be denied by FERC.
PG&E first says that NextEra’s position is based on theoretical damages that might occur, if and only if, PG&E were to move to reject the PPAs. Since PG&E hasn’t done this, for FERC to take the position that it would have the right to govern PPAs in a bankruptcy proceeding of this nature would set a precedent forcing FERC into dealing with the record volumes of corporate PPAs that are being signed across the USA. PG&E suggests that this expansion could threaten the growth of corporate PPAs by adding contract uncertainty.
Next, PG&E states that bankruptcy courts have jurisdiction over the issues raised by NextEra, if PG&E does in fact move toward cancelling these PPAs. PG&E notes that the bankruptcy code specifically states what types of contracts are protected in bankruptcy proceedings, and that PPAs are not on that protected list.
And third, PG&E states that the case law that NextEra suggests is not applicable, because the interests expressed as part of that case law – FirstEnergy’s bankruptcy proceeding in Ohio – aren’t applicable.
NextEra holds long-term power purchase agreements with PG&E for four wind and four solar projects. The first of these solar contracts was signed in 2009, for the 250 MW Genesis Solar concentrating solar power plant, and the company signed a contract for its portion of the 300 MW Desert Sunlight PV project in 2010. Desert Sunlight came online in 2015.
The other two solar contracts are for 20 MW projects awarded under the Renewable Auction Mechanism (RAM) program.
The Warren Buffet-owned Topaz Solar farm saw S&P lower its financial rating five notches from B to junk status due to it also holding a PPA with PG&E.