Pierce Atwood project finance partner Merrill Kramer, who works extensively on renewable energy development, is quoted in Law360 regarding the potential impact of the Pacific Gas & Electric Co. (PG&E) bankruptcy court’s recent, and forceful, ruling finding that the bankruptcy code allows PG&E to reject wholesale power contracts, thereby preempting FERC’s plenary authority under the Federal Power Act and the Natural Gas Act to establish electric and gas rates in interstate commerce.
Merrill notes that allowing PG&E to shed Power Purchase Agreements (PPAs) without any semblance of regulatory review could create massive risks for clean energy project owners, investors, and lenders, to the point of driving some independent developers out of business.
He also pointed out that federal and state regulatory programs could also be exposed. Per PG&E, 298 of its PPAs covering nearly 7.7 gigawatts of generation capacity were signed to comply with California's aggressive renewable portfolio standards requiring utilities to draw increasing percentages of their power from renewable sources.
The case “has and will continue to have an impact on the cost of independent power, and renewables in particular, until this issue is resolved,” he added.
Bankruptcy Court Judge Morali’s decision rebuked FERC’s assertion of jurisdiction as a “power play” exercise, setting up a battle that will likely end up in the U.S. Supreme Court.
The complete article by Keith Goldberg can be found in the June 10, 2019 issue of Law360.