Phillip Burton Federal court house building entrance San Francisco
Phillip Burton Federal Court House. San Francisco, California. (Photo: McComber)

A California bankruptcy judge ruled Friday that the Federal Energy Regulatory Commission (FERC) does not have jurisdiction over energy contracts PG&E has brought to its bankruptcy proceedings.

In his memorandum, U.S. Bankruptcy Judge Dennis Montali said that while FERC has argued energy contracts are its purview, bankruptcy courts are able to handle nearly any type of contract.

As such, Montali came to a definitive decision about FERC’s jurisdiction and control over which contracts are dismissed in the Chapter 11 proceedings.

“Debtors are entitled to this court’s declaratory judgment that (1) FERC does not have concurrent jurisdiction over its decision to permit Debtors to reject (or assume) executory contracts under Section 365; and (2) that the FERC Denial and its two prior rulings described above are of no force and effect and are not binding on Debtors in these cases,” Montali wrote.

The result of this decision is relatively straightforward. The court is asserting its aptitude for understanding and properly deciding about the power purchase agreements PG&E plans to shed as they work through bankruptcy proceedings.

This past April, FERC argued in court it should have a say in the proceedings, as they have the ability to help PG&E exit the market “in an orderly way to ensure it doesn’t turn off the lights, according to testimony obtained from Law360.

Amid the proceedings, PG&E has made headlines for, among other things, doling out bonuses to execs and being the target of a group of seven community choice aggregators who wanted to strip PG&E of its ability to supply electricity.

Renewables Might Be First Contracts to Go

Experts believe that PG&E’s renewables contracts are most at risk in the bankruptcy proceedings. S&P Global said as much this past April in an article weighing the future of the bankruptcy proceedings.

They analyzed an investor note from Credit Suisse in which the company said it was likely that PG&E would shed their renewable energy contracts in light of the overwhelming cost of the California wildfires.

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