The jurisdictional battle over authorizing rejection of wholesale power contracts continues.
Howard L. Siegel is co-chair of the Energy Practice Group at Brown Rudnick Berlack Israels LLP. Contact him at hsiegel@brownrudnick.com, or (860) 509-6519.
The high stakes turf battle over whether the Federal Energy Regulatory Commission (FERC) or the federal bankruptcy courts have jurisdiction over rejecting wholesale power contracts is now in its third round. Round one was fought in 2003 in the NRG bankruptcy case and ended in a settlement among the parties. Round two followed with the Mirant Chapter 11 case. Now punches and counterpunches are flying in round three: the Calpine bankruptcy.
Notwithstanding the volume and intensity of the litigation and the number of decisions rendered over the past three years, resolution of the battle remains anything but clear. In fact, when comparing the Jan. 27, 2006, district court ruling in Calpine to the most recent prior ruling in Mirant, FERC Chairman Joseph T. Kelliher observed that “they came up with the exact opposite answer as a legal matter. … I have to admit that there is some confusion.”1 A summary of the three rounds of battle to date demonstrates why such confusion prevails.