U.S. regulator sides with power suppliers over PG&E contracts

FILE PHOTO: A PG&E truck carrying an American Flag drives past PG&E repair trucks in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photo

(Reuters) - Federal energy regulators said on Friday they had joint jurisdiction with a bankruptcy court over any requests to cancel or renegotiate power contracts by California utility PG&E Corp, which is preparing to file for bankruptcy.

The order by the Federal Energy Regulatory Commission was a win for power producers that supply PG&E with vast amounts with solar and wind power. NextEra Energy Inc, which has several contracts with PG&E, last week asked FERC to declare that PG&E may not modify its wholesale power contracts without the commission’s approval if it files for bankruptcy.

Several other power producers filed comments in support of NextEra’s request, including Exelon Corp, NRG Energy Inc, Consolidated Edison Inc, First Solar Inc and Southern Co.

PG&E has said it is preparing to file for bankruptcy as soon as next week. The utility faces billions of dollars in potential liabilities from devastating wildfires in 2017 and 2018.

The question of what will happen to the utility’s contracts for renewable power is critical for California, which last year delivered 33 percent of its energy from renewable sources and has a goal to source 60 percent of its power from renewables by 2030. PG&E has more than 250 contracts for renewable power that represent $57 billion in investment, it said last month.

PG&E earlier this week argued in response to NextEra’s request that only the bankruptcy court would have jurisdiction over its renewable power contracts, not FERC.

FERC said on Friday it was not persuaded by PG&E’s argument. It acknowledged that the law was “unsettled” but said “these agreements are still subject to the Commission’s jurisdiction and the Commission maintains discretion to exercise its authority.”

“We are reviewing FERC’s order and will respond at the appropriate time,” a PG&E spokeswoman said in an emailed statement to Reuters.

NextEra was not immediately available for comment.

Reporting by Nichola Groom; Editing by Richard Chang and Sonya Hepinstall