PG&E power generators lose legal fight on supply contract

Bloomberg

The power generators that supply bankrupt utility giant PG&E Corp. were dealt a major blow as a judge ruled that federal regulators can’t keep their supply contracts from getting killed.
Power giants including NextEra Energy Inc. and Exelon Corp. had enlisted the help of the Federal Energy Regulatory Commission in ensuring that their long-term contracts with PG&E survive the biggest utility bankruptcy in US history.
But Dennis Montali, the judge overseeing PG&E’s case in San Francisco, decided that the commission doesn’t have the jurisdiction that it has
asserted it does.
The ruling could set up heavy losses for generators who have $42 billion worth of long-term agreements with PG&E, should those deals get tossed by Montali. The fate of these contracts has been thrown into question as the utility grapples with an estimated $30 billion worth of liabilities tied to wildfires its equipment may have ignited. The mere prospect of the
contracts getting killed has
already rattled the power industry, which relies on long-term agreements like these to attract financing for capital-intensive projects.
In presuming to have “concurrent” jurisdiction over the contracts, the federal energy commission “has and continues to have the effect of undermining the function of the bankruptcy court,” Montali said in a scathing, 31-page judgment. “FERC must be stopped and the division and balance of power and authority of the two branches of government restored.”
Montali went on to warn that, if necessary, the court will “enjoin FERC from perpetuating its attempt to exercise power it wholly lacks.”