FERC has opened section 206 paper hearing proceeding to review Energy Harbor LLC’s (formerly FirstEnergy Solutions) sought rejection in bankruptcy court of certain contracts that are subject to FERC's jurisdiction

FES had sought, among other things, to reject in bankruptcy the Jurisdictional Contracts, which are largely PPAs with wind generators, plus an Ohio Valley Electric Corporation contract

The bankruptcy court approved the proposed rejection of the Jurisdictional Contracts, but FERC appealed

In brief, the Sixth Circuit Court of Appeals reversed the rejection of the Jurisdictional Contracts, and remanded the rejection proceedings to the bankruptcy court for further consideration. The Sixth Circuit held that the bankruptcy court must reconsider the proposed rejection of the Jurisdictional Contracts using a standard that is higher than the business judgment standard that ordinarily applies in bankruptcy cases.

With respect to the bankruptcy court’s consideration of the proposed rejection of the Jurisdictional Contracts on remand, the Sixth Circuit required that the bankruptcy court give FERC 'a reasonable accommodation' in providing the Commission’s views to the bankruptcy court with respect to whether the rejection is consistent with the public interest.

In order to provide the Commission’s views, FERC initiated a hearing and investigation under section 206 of the FPA.

Among other things, FERC directed Energy Harbor to provide an explanation as to why the rejection of the contract satisfies the public interest standard. To the extent that such explanation relies on the standard that the contract might impair Energy Harbor’s financial integrity, FERC directed that such response shall include a discussion of the effect of the completed bankruptcy reorganization and Energy Harbor’s emergence from Chapter 11 bankruptcy protection on the application of this standard.

See FERC's order for more

Docket No. EL20-35-000

Tags:
FERC   Wholesale   Energy Harbor   FirstEnergy Solutions  

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