PG&E's Ch. 11 Brings Rift With FERC Over Power Deals
January 29, 2019
Partners Josh Cohen and Dave Doot were quoted in an analysis article, "PG&E's Ch. 11 Brings Rift With FERC Over Power Deals," published by Law360. The article discusses the Federal Energy Regulatory Commission's (FERC) decision that Pacific Gas and Electric Co. (PG&E) could not reject power purchase agreements (PPAs) in bankruptcy without the regulator's blessing. PG&E, which just filed for bankruptcy, reportedly has over $42 billion of PPAs that will be under review in the bankruptcy. In connection with its Chapter 11 bankruptcy filing, PG&E challenged FERC's conclusion that regulatory approval, in addition to bankruptcy court approval, is necessary to drop existing wholesale PPAs. According to the article, PG&E filed an adversary complaint in which the company requested an injunction from a California bankruptcy court that would block FERC from having a say over any wholesale power contracts that PG&E seeks to reject in bankruptcy.
"At the end of the day, it's somewhat of a turf war," Cohen, chair of Day Pitney's bankruptcy and restructuring practice group, told Law360. "It becomes all the more complicated and messy if the directives from bankruptcy court and FERC are conflicting." As noted in the article, experts say if that is the case, the issue of what roles the bankruptcy courts and FERC play in utility bankruptcies is squarely teed up for appellate review. "If [the bankruptcy] plays out and it's not resolved consensually, I don't think it's going to be a bankruptcy court that resolves the issue," said Doot, who chairs Day Pitney's energy and utilities industry group. "It'll be an appellate court and, ultimately, the Supreme Court that resolves the issue."