Courts reject FERC’s bid for jurisdiction in PG&E bankruptcy

A district court has ruled that the bankruptcy court will be where the decisions are made as to what happens to power contracts, ending a push by developers to give FERC a greater say.

March 12, 2019 Christian Roselund

PG&E's office in San Francisco

Image: Wikimedia Commons

In a legal victory for Pacific Gas & Electric Company, the Federal Energy Regulatory Commission (FERC) will not be the venue where what happens to the power contracts signed by the utility will be decided, according to a ruling yesterday by a California district court judge.

The five-page decision by Judge Haywood S. Gilliam states that the bankruptcy code is sufficient to consider the question of what will happen to these contracts, and that it is not necessary to consider federal law. This is a direct rebuttal of FERC’s claim that it has concurrent jurisdiction over the fate of these contracts under the Federal Power Act.

Furthermore, Gilliam cites the argument of bankruptcy court judge Dennis Montali, who stated that these issues will be substantially hashed out in the bankruptcy court.

There is a significant volume of contracts at stake, as PG&E currently holds 9.6 GW of power contracts with 88 different different plant owners. These asset owners include some of the biggest names in the industry, such as NextEra, Berkshire Hathaway, and others, with NextEra alone holding contracts with PG&E for around 600 MW of solar projects.

And FERC isn’t the only party which thinks that it should have a say over the future of these contracts. According to Bloomberg Law, a lawyer for the California Public Utilities Commission has testified that PG&E’s owner will need its permission to cancel any contracts, as this would “interfere” with California’s policy on the matter. Furthermore, both the state legislature and Governor Gavin Newsom (D) have expressed an interest in this case.

Correction: The headline, teaser and lead sentence of this article were changed on March 12 at 11:45 AM EST. The article previously stated that FERC would not be allowed to intervene, but this was not correct in the legal sense of the word, as FERC has not been barred as an intervenor. Instead the district court decided that bankruptcy court would have sole jurisdiction over the case, which is reflected in the updated text. We regret the error.

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