FERC Says, Even In Bankruptcy, Commission Approval Needed To Modify Filed Rates
In response to requests for declaratory orders prompted by an expected bankruptcy filing by Pacific Gas & Electric, FERC issued an order which clarifies its position with regard to bankruptcy filings that seek to reject Commission-jurisdictional wholesale power purchase agreements.
Citing various case law, FERC said, "Against this background, and given the unsettled state of the law, we have reviewed the FPA and Bankruptcy Code in light of the arguments raised in the Petition, and conclude that this Commission and the bankruptcy courts have concurrent jurisdiction to review and address the disposition of wholesale power contracts sought to be rejected through bankruptcy. We find that to give effect to both the FPA and the Bankruptcy Code, a party to a Commission-jurisdictional wholesale power purchase agreement must obtain approval from both the Commission and the bankruptcy court to modify the filed rate and reject the contract, respectively."
"In short, under the FPA, the Commission determines the filed rate and 'except for review of the Commission’s orders, the courts can assume no right to a different one.' We find that a rejection of a Commission-jurisdictional contract in a bankruptcy court alters the essential terms and conditions of the contract and the filed rate; thus, this Commission’s jurisdiction is implicated, and our approval is required," FERC said
"We conclude that this Commission and the bankruptcy courts have concurrent jurisdiction to review and address the disposition of wholesale power contracts sought to be rejected through bankruptcy," FERC said