Commission Watch

The developing jurisdictional battle over authorizing rejection of wholesale power supply agreements is getting white-hot, pitting creditors against ratepayers.

 

Does the Federal Energy Regulatory Commission (FERC) or the federal bankruptcy courts decide whether a bankrupt energy marketer can get out of a wholesale power contract that the marketer says isn't profitable enough? A high-stakes turf battle between FERC and the federal bankruptcy courts is being waged over just this question, and the resolution of the case is anything but clear.

At stake is whether the interests of creditors or the interests of ratepayers will win out in the end. In an industry littered with bankrupt and troubled energy marketers, it's more than an academic question being batted around by teams of lawyers.

The battle has been most dramatically illustrated in the case of NRG Power Marketing Inc. (NRG-PMI), where the variety and pace of legal proceedings involving the company, the Connecticut attorney general, and Connecticut Department of Public Utility Control resembles a complex legal chess match.

Unfortunately, the battle so far between creditors and ratepayers appears to be taking place in two parallel universes, the bankruptcy court and FERC. Because it's not clear which, if either of these arbiters has authority over the other, there's a real danger that NRG-PMI may be faced with conflicting, all-or-nothing results. It's a fight that could ultimately end up in the U.S. Supreme Court.