Exhibit 7 

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167 FERC ¶ 61,096

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Neil Chatterjee, Chairman;

 Cheryl A. LaFleur and Richard Glick,

 

NextEra Energy, Inc. and NextEra Energy Partners, L.P.

v. 

Pacific Gas and Electric Company

 Docket Nos. EL19-35-001

Exelon Corporation

v.

Pacific Gas and Electric Company

EL19-36-001

(consolidated)

ORDER DENYING REHEARING

(Issued May 1, 2019)

On February 25, 2019, Pacific Gas and Electric Company (PG&E) sought 

rehearing of two Commission orders1in which the Commission held that it and 

bankruptcy courts have concurrent jurisdiction to review and address the disposition of 

wholesale power contracts sought to be rejected through bankruptcy. In this order, we 

consolidate the proceedings and deny PG&E’s rehearing requests.

 

1 NextEra Energy, Inc. v. Pac. Gas and Elec. Co., 166 FERC ¶ 61,049 (2019) 

(NextEra v. PG&E); Exelon Corp. v. Pac. Gas and Elec. Co., 166 FERC ¶ 61,053 (2019) 

(Exelon v. PG&E). On February 11, 2019, the Secretary of the Commission issued an 

errata notice in both Docket Nos. EL19-35-000 and EL19-36-000 to include parties that 

were inadvertently omitted from the issued orders.

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I. Background

A. Procedural History

On January 13, 2019, PG&E announced through a filing with the United States 

Securities and Exchange Commission that it would file for bankruptcy protection due to, 

among other reasons, liabilities relating to wildfires in California, and that it would make 

that filing on or about January 29, 2019.2 Prior to the bankruptcy filing, however, on 

January 18, 2019, NextEra Energy, Inc. and NextEra Energy Partners, L.P. (collectively, 

NextEra) filed, pursuant to sections 206 and 306 of the Federal Power Act (FPA)3and 

Rules 206 and 207 of the Commission’s Rules of Practice and Procedure,4a petition for 

declaratory order and complaint (NextEra Petition) against PG&E requesting that the 

Commission find that, if PG&E files for bankruptcy, PG&E may not abrogate, amend, or 

reject in a bankruptcy proceeding any rates, terms, and conditions of its wholesale power 

contracts subject to the Commission’s jurisdiction without first obtaining approval from 

the Commission under FPA sections 205 and 206. On January 22, 2019, Exelon 

Corporation (Exelon) submitted a similar petition for declaratory order and complaint 

(Exelon Petition) pursuant to FPA sections 206 and 306 and Rules 206 and 207 of the 

Commission’s Rules of Practice and Procedure.

The Commission issued orders on the NextEra Petition and Exelon Petition on 

January 25, 2019 and January 28, 2019, respectively. The NextEra v. PG&E and Exelon 

v. PG&E orders clarified the Commission’s position with regard to its jurisdiction over 

the wholesale power contracts that a debtor may attempt to reject through bankruptcy. 

The Commission reviewed the FPA and the Bankruptcy Code, and, noting that case law 

interpreting the two acts together is unsettled,

5

the Commission found that to give effect 

to both the FPA and the Bankruptcy Code, a party to a Commission-jurisdictional 

wholesale power contract must obtain approval from both the bankruptcy court and the 

 

2 Pac. Gas and Elec. Corp. & PG&E, Current Report (Form 8-K) (Jan. 13, 2019).

3 16 U.S.C. §§ 824e, 825e (2012).

4 18 C.F.R. §§ 385.206, 385.207 (2018).

5 See In the Matter of Mirant Corp., 378 F.3d 511 (5th Cir. 2004) (Mirant); In re 

Calpine Corp., 337 B.R. 27 (S.D.N.Y. 2006) (Calpine); In re Bos. Generating, LLC, 

No. 10 Civ. 6258, 2010 WL 4616243 (S.D.N.Y. Nov. 12, 2010) (Boston Generating); In 

re FirstEnergy Solutions Corp. v. FERC, 2018 WL 2315916 (Bankr. N.D. Ohio May 18, 

2018) (FirstEnergy).

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Commission to reject a contract and modify the filed rate, respectively.6 The 

Commission found that a rejection of a Commission-jurisdictional contract in a 

bankruptcy court alters the essential terms and conditions of the contract and the filed 

rate; such modifications implicated the Commission’s exclusive jurisdiction to determine 

just and reasonable rates and the Supreme Court of the United States (Supreme Court) 

has held several times that no court may set aside or modify a Commission-jurisdictional 

rate except on direct review of the Commission’s orders.7

On January 29, 2019, PG&E filed a petition for bankruptcy in the United States 

Bankruptcy Court for the Northern District of California (California Bankruptcy Court), 

and initiated an adversarial proceeding against the Commission by filing a complaint for 

declaratory judgment and preliminary and permanent injunctive relief and a motion for a 

preliminary injunction against the Commission.8

 

6 NextEra v. PG&E, 166 FERC ¶ 61,049 at P 28; Exelon v. PG&E, 166 FERC 

¶ 61,053 at P 25.

7 NextEra v. PG&E, 166 FERC ¶ 61,049 at P 29 (quoting Montana-Dakota Utils. 

Co. v. Nw. Pub. Serv. Co., 341 U.S. 246, 251 (Montana-Dakota Utilities); Exelon v. 

PG&E, 166 FERC ¶ 61,053 at P 26 (same). The Supreme Court has reiterated this 

principle numerous times. See, e.g., Ark. La. Gas Co. v. Hall, 453 U.S. 571, 577 (1981) 

(Ark. La. Gas) (“No court may substitute its own judgment on reasonableness for the 

judgment of the Commission. . . . The authority to decide whether the rates are 

reasonable is vested . . . solely in the Commission . . . .” (citing Montana-Dakota 

Utilities, 341 U.S. at 251; FPC v. Hope Natural Gas Co., 320 U.S. 591, 611 (1944))); 

Nantahala Power and Light Co. v. Thornburg, 476 U.S. 953, 962-64 (1986) (construing 

Montana-Dakota Utilities, Ark. La. Gas, and filed rate doctrine precedent in other 

federally-regulated industries); Miss. Power & Light Co. v. Miss. ex rel. Moore, 487 U.S. 

354, 371-72 (1988) (“FERC has exclusive authority to determine the reasonableness of 

wholesale rates. It is now settled that ‘the right to a reasonable rate is the right to the rate 

which the Commission files or fixes, and, except for review of the Commission’s orders, 

a court can assume no right to a different one on the ground that, in its opinion, it is the 

only or the more reasonable one.’ This principle binds both state and federal courts and 

is in the former respect mandated by the Supremacy Clause.” (citations and alterations 

omitted) (quoting Nantahala, 476 U.S. at 963-64 (quoting Montana–Dakota Utilities,

341 U.S. at 251-252))).

8 See generally Complaint for Declaratory Judgment & Preliminary & Permanent 

Injunctive Relief, In re: PG&E Corp., Adv. Pro. No. 19-03003 (Bankr. N.D. Cal. Jan. 29, 

2019).

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PG&E proffers several alleged errors that the Commission made in its underlying 

orders, each of which are addressed below.9

B. Subsequent Interventions and Proceedings

Since the Commission issued the NextEra v. PG&E and Exelon v. PG&E orders, 

several parties have filed motions to intervene out-of-time in both proceedings. In 

Docket No. EL19-35-000, Nevada Irrigation District, Crockett Cogeneration (Crockett), 

and Hatchet Ridge Wind, LLC (Hatchet Ridge) sought intervention out-of-time. Crockett 

states that it is not seeking to alter the existing record, the status of this proceeding, or 

any procedural schedule, and, as a result, granting the intervention will not result in any 

disruption to the proceeding or prejudice any party. Hatchet Ridge argues that in order to 

protect its wholesale power contract with PG&E from modification, rejection, 

termination, or cancellation it must be granted intervenor status in this proceeding. 

Hatchet Ridge states that good cause exists for the Commission to grant its motion to 

intervene out-of-time because (1) its interests will not be adequately represented by other 

parties, (2) its participation in the proceeding will not prejudice or burden other parties 

as it supports and agrees with the Commission’s analysis in NextEra v. PG&E, and 

(3) stakeholders were not afforded adequate time to intervene as the comment period was

only four days. In Docket No. EL19-36-000, Crockett filed a motion to intervene out-oftime arguing again that its intervention should be granted because it is not seeking to alter 

the existing record, the status of this proceeding, or any procedural schedule, and, as a 

result, its participation will not result in any disruption to the proceeding or prejudice any 

party.

On April 10, 2019, the California Bankruptcy Court held a hearing relating to 

PG&E’s complaint for a declaratory judgment and motion for a preliminary injunction

against the Commission. One of the many issues discussed at the hearing was whether 

the Commission has concurrent jurisdiction over the disposition of wholesale power 

contracts.

II. Discussion

A. Procedural Matters

When late intervention is sought after the issuance of a dispositive order, the 

prejudice to other parties and burden upon the Commission of granting the late 

intervention may be substantial. Thus, movants bear a higher burden to demonstrate 

good cause for granting such late intervention. Nevada Irrigation District, Crockett, and 

 

9

Infra II.B. 

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Hatchet Ridge have not met this higher burden of justifying their late intervention.10 We 

therefore deny these untimely motions.

Because the NextEra and Exelon Petitions raise common issues of law and fact 

that are now the subject of PG&E’s nearly identical rehearing requests, and for 

administrative efficiency, we will consolidate the proceedings for purposes of rehearing.

B. Substantive Matters

1. Concurrent Jurisdiction As Creating A Conflict with 

Bankruptcy Code

a. PG&E Rehearing Request

PG&E argues that the Commission failed to give effect to the Bankruptcy Code or 

the goals Congress sought to achieve through it.11 Specifically, PG&E states that, with 

the Bankruptcy Code, Congress intended “to permit the successful rehabilitation of 

debtors” and “prevent a debtor from going into liquidation, with an attendant loss of jobs 

and possible misuse of economic resources.”12 PG&E asserts that the authority to reject 

executory contracts is an integral piece of the bankruptcy process that Congress designed 

and is essential to the realization of Congress’ goal to steer debtors away from 

liquidation. PG&E notes that a debtor-in-possession has the flexibility to assume or 

reject any executory contracts at any time until a reorganization plan is confirmed,13 and 

the Bankruptcy Code does not except wholesale power contracts from the possibility of 

assumption or rejection.14

 

10 See, e.g., Midwest Indep. Transmission Sys. Operator, Inc., 102 FERC ¶ 61,250, 

at P 7 (2003).

11 PG&E Rehearing Request, Docket No. EL19-35-001, at 6; PG&E Rehearing 

Request, Docket No. EL19-36-001, at 6 (collectively, PG&E Rehearing Request). 

Because PG&E’s arguments on rehearing and pagination are identical, we refer to both 

rehearing requests as simply, “PG&E Rehearing Request.”

12 PG&E Rehearing Request at 6 (citing NLRB v. Bildisco & Bildisco, 465 U.S. 

513, 522-23 (1984) (Bildisco)).

13 Id. at 7 (citing 11 U.S.C. §§ 365(d)(2), 1107(a), 365(a)).

14 Id. at 7-8 (citing Bildisco, 465 U.S. at 522-23).

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PG&E further asserts that the Commission’s approval requirement obviates the 

purpose of section 365(a) of the Bankruptcy Code.15 PG&E states that if the Commission 

withholds approval, the debtor will not be able to successfully reject a wholesale power 

contract, even if the bankruptcy court approves the rejection. PG&E asserts that, even 

where the Commission ultimately approves the rejection, the debtor would still be 

deprived of the flexibility provided by section 365 of the Bankruptcy Code.

b. Commission Determination

We deny rehearing. As an initial matter, the Supreme Court has long recognized

that the FPA is designed to protect consumers,

16 and the Commission’s role in evaluating 

the rates, terms, and conditions of wholesale power contracts is to protect the public 

interest.

17

 By contrast, the purpose of the Bankruptcy Code, as PG&E acknowledges, is 

to provide a path to rehabilitate bankrupt debtors.

18

 These are two distinct, yet vitally 

important, roles, and we conclude that it is necessary to give effect to both.

Wholesale power contracts are not simple run-of-the-mill contracts between 

two private parties; rather, these contracts, while privately negotiated, implicate the 

public’s interest in the orderly production of plentiful supplies of electricity at just and 

 

15 Id. at 8-9.

16 See, e.g., Nat’l Ass’n for Advancement of Colored People v. FPC, 425 U.S. 662, 

670 (1976) (NAACP v. FPC) (stating that the primary purpose of the FPA is to protect 

electricity consumers through “the orderly development of plentiful supplies of 

electricity . . . at reasonable prices”). The Court has also held that the protection of 

consumers is the purpose of the similarly structured Natural Gas Act. See, e.g., Atl. Ref.

Co. v. Pub. Serv. Comm’n of N.Y., 360 U.S. 378, 388 (1959) (the Natural Gas Act was 

“framed to afford consumers a complete, permanent and effective bond of protection 

from excessive rates and charges”); FPC v. Hope Nat. Gas Co., 320 U.S. at 610 (primary 

purpose of the Natural Gas Act was to protect consumers from exploitation by natural gas 

companies).

17 See, e.g., FPC v. Sierra Pac. Power Co., 350 U.S. 348, 355 (1956) (Sierra) 

(“[T]he purpose of the power given [to the Commission under the FPA] is the protection 

of the public interest.”).

18 See PG&E Rehearing Request at 6 (citing Bildisco, 465 U.S. at 513, 522-23).

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reasonable rates19 and, as filed rates, carry the force of law20 binding sellers and 

purchasers alike.

21

 Whether a wholesale rate is just and reasonable – and whether the 

abrogation or modification of a wholesale power contract is necessary to protect the 

public interest – is a question that the Commission is statutorily obligated—and 

exclusively authorized—to consider. Given the Commission’s exclusive authority to 

make such determinations, as codified by Congress in the FPA and affirmed by Supreme 

Court and other judicial precedent,

22 we conclude that the Commission’s unique role 

neither subsumes nor is subsumed by the Bankruptcy Code. The fact that a contract party 

has sought bankruptcy protection does not transform Commission-jurisdictional contracts 

into non-jurisdictional ones; it does not strip the public of the protection afforded to it 

under the FPA; and it does not divest the Commission of its statutory mandate to protect 

the public interest by examining the ramifications of unilateral changes to wholesale 

power contracts, a highly-technical analysis that the bankruptcy process is not designed 

to consider. Nor does the filing of a bankruptcy petition effect a transfer of the 

Commission’s authority to the bankruptcy court. Nothing in the FPA or the Bankruptcy 

Code provides otherwise.

We disagree with PG&E’s assertion that concurrent jurisdiction creates a conflict 

with the Bankruptcy Code. First, as a general matter, the fact that there may be 

two different processes – one before the bankruptcy court and one before the 

Commission – does not alone presuppose that there is a conflict between these processes. 

As stated above, the roles of the bankruptcy court and the Commission are different; 

there is no direct conflict between the Bankruptcy Code’s process for a debtor to emerge 

 

19 See NAACP v. FPC, 425 U.S. at 670.

20 See, e.g., Cal. ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 853 (9th Cir. 2004) 

(filed rates “are considered to be ‘the law’” (citation omitted)).

21 See Morgan Stanley Capital Grp. Inc. v. Pub. Util. Dist. No. 1 of Snohomish 

Cty., Wash., 554 U.S. 527, 548 (2008) (Morgan Stanley) (“The standard for a buyer’s 

challenge [of a wholesale power contract] must be the same, generally speaking, as the 

standard for a seller’s challenge: The contract rate must seriously harm the public 

interest.”); Bos. Edison Co. v. FERC, 856 F.2d 361, 372 (1st Cir. 1988) (filed rate “is to 

be treated as though it were a statute, binding upon the seller and purchaser alike.” (citing 

Nw. Pub. Serv. Co. v. Montana-Dakota Utils. Co., 181 F.2d 19, 22 (8th Cir. 1950))). See 

also Lowden v. Simonds-Shields-Lonsdale Grain Co., 306 U.S. 516, 520 (1939) (“Until 

changed, tariffs bind both carriers and shippers with the force of law.”).

22 See, e.g., Montana-Dakota Utilities, 341 U.S. at 251; see also supra note 7

(listing precedent discussing the Commission’s authority).

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from bankruptcy and the Commission’s role in ensuring just and reasonable wholesale 

electricity rates. 

Second, we find no conflict within the Bankruptcy Code itself. Section 1129(a)(6) 

of the Bankruptcy Code, for example, contemplates the Commission’s role in a 

bankruptcy proceeding by providing that the bankruptcy court shall confirm a 

reorganization plan only if “[a]ny governmental regulatory commission with jurisdiction, 

after confirmation of the plan, over the rates of the debtor has approved any rate change 

provided for in the plan, or such rate change is expressly conditioned on such 

approval.”23 The role of the Commission under its concurrent jurisdiction approach –

executing its exclusive authority to protect the public interest outside of the bankruptcy 

context – is consistent with section 1129’s recognition that debtors must seek regulatory 

approval of rate changes.

To be clear, the Commission neither presumes to sit in judgment of rejection 

motions nor seeks to arrogate the role of adjudicating bankruptcy proceedings. The 

Commission recognizes that rendering a determination on rejection motions is solely 

within the province of the bankruptcy court. But a bankruptcy court’s authorization to

reject a wholesale power contract does not relieve a debtor of its separate regulatory 

obligations under the FPA. Unlike other contracts, the duty to perform under wholesale 

power contracts may be required not only from the private law of contracts but also

pursuant to the FPA and thus by the Commission as the agency granted exclusive 

authority to implement the Act.

24

 Accordingly, a bankruptcy court’s authorization to 

reject a contract subject to this Commission’s jurisdiction is not a license to cease or 

modify performance in whatever manner the debtor wishes. Performance under such 

contracts remains subject to this Commission’s review to determine whether any 

cessation or modification of performance is just and reasonable, and not unduly 

discriminatory or preferential under the FPA. 

2. Rejection As A Breach And Rejection As Altering Essential 

Terms and Conditions

a. PG&E Rehearing Request

PG&E argues that the Bankruptcy Code and court precedent establish that 

rejection of a contract does not require Commission approval because rejection is a 

 

23 11 U.S.C. § 1129(a)(6) (2012).

24 Calpine, 337 B.R. at 33 (citing Pa. Water & Power Co. v. FPC, 343 U.S. 414, 

422 (1952)).

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breach of contract, not a change to the terms.25 PG&E states that, like any other breach, 

rejection does not change the terms of the contract, but relies on and continues to give 

effect to those terms in order to determine the amount owed in damages. PG&E explains 

that the damages owed by the debtor are calculated using the terms of the contract.26

PG&E asserts that rejection in bankruptcy is entirely different from the abrogation 

of a contract under FPA section 206, and thus does not implicate the filed-rate doctrine.

27

 

According to PG&E, abrogation of a contract frees both parties from their remaining 

obligations under the contract. PG&E states that when there is a material breach of 

contract, it is common for performance under the contract to cease and for the party in 

breach to pay damages.28 PG&E asserts that the cessation of performance after breach 

does not mean that the contract has been abrogated or rescinded, but rather the terms of 

the contract still bind the parties and provide the basis for the calculation of damages.

Along similar lines, PG&E argues that the Commission failed to explain why the 

filed-rate doctrine applies differently to a breach of contract that arises in the bankruptcy 

context than it does to a breach that arises outside of bankruptcy.29 PG&E notes that 

when a breach of contract arises outside of bankruptcy, the Commission does not hold 

that the party in breach must seek Commission approval to cease performance and pay 

damages.30 PG&E argues that such disparate treatment indicates exactly the kind of 

discrimination against debtors that the Bankruptcy Code expressly forbids.31

 

25 PG&E Rehearing Request at 10 (citing Mirant, 378 F.3d 511; 11 U.S.C. 

§ 365(g)).

26 Id. at 11.

27 Id. 

28 Id. at 12.

29 Id. at 13.

30 Id. at 13-14 (citing Ark. La. Gas Co. v. Hall, 7 FERC ¶ 61,175, at 61,322 

(1979); S. Md. Elec. Coop. v. J.P. Morgan Ventures Energy Corp., 155 FERC ¶ 61,164, 

at P 23 (2016); Sw. Power Pool, Inc., 150 FERC ¶ 61,091, at P 10 (2015); Portland Gen. 

Elec. Co., 72 FERC ¶ 61,009, at 61,020-61,022 (1995); PPL Elec. Util. Corp., 92 FERC 

¶ 61,057 (2000); S. Cal. Edison Co., 85 FERC ¶ 61,023 (1998), reh’g denied, 85 FERC 

¶ 61,389 (1998)).

31 Id. at 14 (citing 11 U.S.C. § 525).

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PG&E similarly argues that the Commission erred in failing to identify the 

essential terms and conditions of the contract that are altered by rejection.32 PG&E states 

that it believes that the Commission must be referring to those terms and conditions that 

exist generically in all wholesale power contracts, including price, duration, and quantity. 

PG&E asserts that none of these terms are altered by a rejection. First, PG&E argues that 

rejection does not alter the price, because the price is used to calculate the damages 

owed.33 PG&E notes that an insolvent debtor may not be able to pay the full amount of 

contract damages owed, but that inability to pay has nothing to do with the contract rate 

used to calculate damages, and therefore cannot be considered a change to the filed rate.34 

Second, PG&E argues that rejection neither abrogates nor shortens the period of 

performance; rather, it is used, along with the price, to determine the non-breaching 

party’s expectancy under the wholesale power contract and its claim for damages against 

the estate. PG&E requests that the Commission clarify what it believes would be the 

legal effect of the Commission’s approval contemplated in its underlying orders. Third, 

PG&E argues that rejection also does not change the quantity of electric energy that the 

contract requires to be purchased or sold.35

b. Commission Determination

We clarify that the essential terms and conditions of a wholesale power contract 

that the Commission was referencing in the underlying orders were to the price, duration, 

and quantity. Despite PG&E’s attempt to minimize the stated effect of a rejection on any 

such rates, terms and conditions, rejection of a wholesale power contract amounts to 

more than a simple breach in the typical sense, in that rejection is a court-authorized 

breach that may result in the complete cessation of performance under contract.36 It 

would eviscerate the Commission’s exclusive jurisdiction under the FPA to hold that

rejection of a wholesale power contract permits the unilateral termination of a regulatory 

obligation by the debtor.

37

 

32 Id. at 15.

33 Id. 

34 Id. at 16.

35 Id. at 17.

36 Calpine, 337 B.R. at 36.

37 See id. (“This is not a run-of-the-mill contract dispute. . . . The breach here is 

not a dispute, nor does it require any contract interpretation, it is a complete cessation of 

performance under the terms and conditions of the [wholesale power contracts].”). The 

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Wholesale power contracts are not like other contracts that petitioners may seek to 

reject through bankruptcy. In enacting the FPA, Congress declared that “the business of 

transmitting and selling electric energy for ultimate distribution to the public is affected 

with the public interest.”

38

 Accordingly, Congress developed a comprehensive regulatory 

framework for protecting that interest, which the Commission has the responsibility to 

administer. And although wholesale power contracts are privately negotiated, such

contracts must be filed with the Commission in accordance with its regulations to be

lawful under the FPA,

39 and once filed, wholesale power contracts become the 

“equivalent of a federal regulation,”40 imposing obligations on the parties that extend 

beyond private contract law. Wholesale power contracts, and any changes to the rates, 

terms and conditions therein remain subject to review by the Commission, an 

administrative agency charged with protecting the “public interest,” and the contracted-

 

Supreme Court has likewise rejected arguments that the filed-rate doctrine can be 

circumvented by recasting the modification of a contract rate as a “breach.” Ark. La. 

Gas, 453 U.S. at 579 (rejecting claim that the “state court has done no more than 

determine the damages they have suffered as a result of Arkla’s breach of the contract” 

because “the Commission itself has found that permitting this damages award could have 

an ‘unsettling effect . . . on other gas purchase transactions’ and would have a ‘potential 

for disruption of natural gas markets . . . .’” (quoting Ark. La. Gas Co. v. Hall, 13 FERC

¶ 61,100, at 61,213 (1980))); id. at 580 (“Congress withheld the authority to grant 

retroactive rate increases or to permit collection of a rate other than the one on file. It 

would surely be inconsistent with this congressional purpose to permit a state court to do 

through a breach-of-contract action what the Commission itself may not do.”); id. at 584 

(“We hold that the filed rate doctrine prohibits the award of damages for Arkla’s breach 

during the period that respondents were subject to Commission jurisdiction.”).

38 16 U.S.C. § 824 (2012). See also Sierra, 350 U.S. at 355 (“[T]he purpose of the 

power given [to the Commission under the FPA] is the protection of the public interest.”).

39 See 16 U.S.C. § 824d(c) (“[E]very public utility shall file with the 

Commission . . . all rates and charges for any transmission or sale subject to the 

jurisdiction of the Commission, and the classifications, practices, and regulations 

affecting such rates and charges, together with all contracts which in any manner affect or 

relate to such rates, charges, classifications, and services.”); id. § 824d(d) (“Unless the 

Commission otherwise orders, no change shall be made by any public utility in any such 

rate, charge, classification, or service, or in any rule, regulation, or contract relating 

thereto, except after sixty days’ notice to the Commission and to the public.”).

40 Calpine, 337 B.R. at 37 (citing Cal. ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 

831, 839 (9th Cir. 2004)).

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for rates are recoverable from ratepayers. Thus, in many ways, wholesale power 

contracts are unlike other private contracts that a debtor may seek to reject through 

bankruptcy. And “just as regulatory action was required to transform the terms and 

conditions of [wholesale power contracts] into regulated duties, so also is regulatory 

action from [the Commission] required to eliminate those duties.”41

Since its landmark decisions in Mobile and Sierra in 1956,42 the Supreme Court 

has repeatedly held that parties may not unilaterally abrogate or modify their voluntarily 

negotiated, arms’-length contracts subject to the Commission’s jurisdiction unless the 

Commission first “concludes that the contract seriously harms the public interest.”43 

Thus, in the absence of a contract clause permitting unilateral modification,44 parties to 

such contracts would need to file a complaint under FPA section 206 to seek Commission 

approval before modifying its contract rates. In such a case, the Commission would 

review the contracts to determine whether the Mobile-Sierra presumption attaches to the 

wholesale power contracts, and if so, whether the modification of the contracts would be 

 

41 Id. (citing California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d at 839; Pa. Water 

& Power Co. v. FPC, 343 U.S. 414 (1952)).

42 See United Gas Pipe Line Co. v. Mobile Gas Serv. Corp., 350 U.S. 332, 343-44

(1956) (Mobile); Sierra, 350 U.S. at 352-55.

43 Morgan Stanley, 554 U.S. at 530. See also id. at 534 (“As we said in a later 

case, ‘[t]he regulatory system created by the [FPA] is premised on contractual 

agreements voluntarily devised by the regulated companies; it contemplates abrogation of 

these agreements only in circumstances of unequivocal public necessity.’” (quoting 

Permian Basin Area Rate Cases, 390 U.S. 747, 822 (1968)); id. at 545-46 (“Therefore, 

only when the mutually agreed-upon contract rate seriously harms the consuming public 

may the Commission declare it not to be just and reasonable.”); id. at 546-47 (“[T]he 

ordinary mode for evaluating contractually set rates is to look to whether the rates 

seriously harm the public interest, not to whether they are unfair to one of the parties that 

voluntarily assented to the contract.”); accord NRG Power Mktg., LLC v. Me. Pub. Utils. 

Comm’n, 558 U.S. 165, 174, 175 (2010) (quoting Morgan Stanley, 554 U.S. at 530, 

545-46). 

44 Two years after its twin decisions in Mobile and Sierra, the Supreme Court 

“held that parties could contract out of the Mobile-Sierra presumption by specifying in 

their contracts that a new rate filed with the Commission would supersede the contract 

rate.” Morgan Stanley, 554 U.S. at 534 (describing the holding in United Gas Pipe Line 

Co. v. Memphis Light, Gas and Water Div., 358 U.S. 103, 110-13 (1958) (Memphis).

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required by the public interest.

45

 Without performing such an analysis or prejudging the 

issues, as PG&E has not sought to reject or modify any wholesale power contracts, we 

simply note that it is the analysis that the Supreme Court has required the Commission to 

apply and we see no reason to apply a different analysis to entities in bankruptcy. We 

therefore are not acting in a manner that discriminates against PG&E because it is in 

bankruptcy; rather, we are clarifying that we would treat its attempt to modify a filed rate 

set through a wholesale power contract as we would any entity attempting to do the same 

in a typical FPA section 206 proceeding.

In response to PG&E’s request that the Commission clarify what it believes would 

be the legal effect of Commission approval to modify the contracted-for price, duration, 

or quantity, we clarify that such approval would allow modification of a filed rate. 

3. Alternative and Less Disruptive Means Available to Protect the 

Commission’s Jurisdiction

a. PG&E Rehearing Request

PG&E argues on rehearing that the Commission’s assertion of jurisdiction over all 

wholesale power contracts that may be rejected in bankruptcy will interfere with the 

bankruptcy process, and in some cases, could frustrate the debtor’s ability to reorganize 

successfully.46 PG&E further alleges that the Commission’s approach is far broader than 

necessary as it would apply to every wholesale power contract without regard to the 

terms of the contract or to whether the reviewing court had even arguably violated the

filed-rate doctrine.47

PG&E claims that the Commission failed to consider that other well-established 

and less disruptive means exist to protect its jurisdiction. For example, PG&E claims that 

if the bankruptcy court were to calculate damages in a manner that departs from the 

contract rate, the disadvantaged party could raise the filed-rate doctrine in that forum, or 

parties could petition the Commission for declaratory orders where a legitimate concern 

arises where the bankruptcy court may take action that runs afoul of the filed rate 

doctrine.48 Lastly, PG&E states that the Bankruptcy Code itself protects the 

Commission’s ratemaking jurisdiction by withholding the ultimate goal of the Chapter 11 

 

45 Morgan Stanley, 554 U.S. at 544-51.

46 PG&E Rehearing Request at 18.

47 Id.

48 Id. 

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process – confirmation of the reorganization plan – unless and until any change to the 

debtor’s rates has received the appropriate regulatory approval.49

b. Commission Determination

We deny PG&E’s rehearing request. PG&E argues that the Commission must 

exercise restraint in evaluating specific circumstances, but the question here is one of 

general applicability—i.e., whether the Commission has jurisdiction to review and 

approve the modification or abrogation of wholesale power contracts that are the subject

of rejection in bankruptcy. We find that by asserting concurrent jurisdiction with the 

bankruptcy court such as to require approval from both the bankruptcy court and the 

Commission where a debtor seeks to reject a wholesale power contract through 

bankruptcy, this Commission ensures that it will have an opportunity to review any 

attempt to modify the filed rate.

4. Unexplained Departure from Precedent

a. PG&E Rehearing Request

PG&E argues on rehearing that the Commission failed to explain its departure 

from Commission precedent in California Electricity Oversight Board v. Calpine Energy 

Services, L.P. (CEOB),

50 where, according to PG&E, the Commission announced that it 

would follow the rule set out in Mirant. PG&E notes that CEOB did not arise in the 

United States Court of Appeals for the Fifth Circuit (Fifth Circuit), and thus, the 

Commission was not bound to follow Mirant, but PG&E alleges that the Commission 

chose to follow the decision because it agreed with Mirant’s conclusions.51 PG&E 

asserts that the Commission continued to embrace the logic of CEOB in USGen New 

England, Inc.52 where the Commission deferred the issues of contract law to the 

bankruptcy court and determined that the filed-rate doctrine did not apply to the facts 

before it because damages would be calculated starting with the filed rates.

 

49 Id. at 19 (citing 11 U.S.C. § 1129(a)(6)).

50 114 FERC ¶ 61,003 (2006).

51 PG&E Rehearing Request at 19.

52 116 FERC ¶ 61,285 (2006) (USGen), reh’g granted in part & denied in part, 

118 FERC ¶ 61,172 (2007).

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b. Commission Determination

We disagree with PG&E’s assertion that the Commission’s decision in these 

proceedings is an unexplained departure from Commission precedent, as the underlying 

orders discuss the emerging split in federal courts over the last thirteen years when 

interpreting the FPA and Bankruptcy Code.

53

 In CEOB, the Commission provided 

interim guidance in response to a petition seeking specific performance of a wholesale 

power contract that the debtor, Calpine Energy Services, LP and Calpine Corporation

(together, Calpine), sought to reject through bankruptcy. In the order, the Commission 

recognized that, although it had reached a different result in a previous case where the 

Commission required specific performance of a contract that the seller sought to reject 

through bankruptcy,54 a federal court of appeals, the Fifth Circuit, had “now spoken” to 

the issue – the most recent federal court decision at the time, and the Commission stated 

that it intended follow that decision.

55

 Quoting Mirant at length without further 

explanation or commentary, CEOB cannot reasonably be read as an endorsement of 

Mirant’s substantive holding.

On the contrary, the Commission stated that, under Mirant, “[a] Bankruptcy Court 

cannot reject a FERC-jurisdictional contract under the business judgment rule ‘because it 

would not account for the public interest inherent in the transmission and sale of 

electricity.’”

56

 The Commission therefore stated that a bankruptcy court must “carefully 

scrutinize the impact of rejection upon the public interest and . . . ensure that rejection 

does not cause any disruption in the supply of electricity to other public utilities or to 

consumers.”57 The Commission then sought comment on whether rejection of the 

wholesale power contract at issue there would impact the public interest so that the 

Commission may develop a record and inform the bankruptcy court of its views 

regarding a potential rejection of that wholesale power contract.

58

 

53 NextEra v. PG&E, 166 FERC ¶ 61,049 at PP 24-27; Exelon v. PG&E, 

166 FERC ¶ 61,053 at PP 21-24.

54 Blumenthal v. NRG Power Mkg., Inc., 104 FERC ¶ 61,210, at P 2 (2003) 

(Blumenthal).

55 CEOB, 114 FERC ¶ 61,003 at P 11.

56 Id.

57 Id.

58 Id. PP 12-14.

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Moreover, following the issuance of CEOB, another federal court, the United 

States District Court for the Southern District of New York (District Court) issued its 

order in Calpine, regarding the exact same parties and facts at issue before the 

Commission in CEOB. In Calpine, the District Court found that it lacked jurisdiction to 

authorize rejection of wholesale power contracts “because doing so would directly 

interfere with the Commission’s jurisdiction over the rates, terms, conditions, and 

duration of wholesale energy contracts.”59 The District Court explained that the 

Commission had plenary jurisdiction over wholesale power contracts, including the 

contracts at issue there, and nothing in the Bankruptcy Code evidenced Congress’ intent 

to limit the Commission’s regulatory authority.60 The court held: 

Because there is nothing in the Bankruptcy Code that limits 

FERC’s jurisdiction, Calpine cannot achieve in Bankruptcy 

Court what neither it, nor any other party in this case, nor any 

other federally regulated energy company in the country 

could do without seeking FERC approval: cease performance 

under the rates, terms, and conditions of filed rate wholesale 

energy contracts in the hopes of getting a better deal.61

The District Court further rejected arguments that tried to distinguish between a 

breach of a contract through rejection and termination of wholesale energy contracts, 

stating that a “breach” through rejection is not a typical breach where parties dispute the 

terms of a contract, but rather the unilateral termination of a regulatory obligation.62 

Rather, the court distinguished between “run-of-the-mill” contract disputes, where the 

Commission does not exercise special expertise in determining simple interpretations of 

contracts and breach through rejection, which it described as “a complete cessation of 

performance under the terms and conditions of [a wholesale power contract].”63 The 

District Court then acknowledged that its order was in conflict with the Fifth Circuit’s 

decision in Mirant and discussed its disagreement.64

 

59 Calpine, 337 B.R. at 36.

60 Id. at 32-33.

61 Id. at 36.

62 Id. at 36.

63 Id. at 36.

64 Id. at 37-39.

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In 2010, the District Court was again presented with a bankrupt debtor attempting 

to reject a wholesale agreement.65 There, the parties agreed that the Commission must 

make a public interest determination that would permit the debtor to reject the wholesale 

power contract. The parties there also agreed that as long as the Commission approves 

terminating the contract, the bankruptcy court may determine whether the wholesale 

agreement can be rejected pursuant to the Bankruptcy Code.66 Thus, the parties’ sole 

dispute was whether the bankruptcy court and the Commission may consider the rejection 

motion concurrently or the bankruptcy court must wait until the Commission has ruled. 

The court dismissed this dispute, stating it was of no consequence because “[i]f either the 

bankruptcy court or FERC does not approve the Debtors’ rejection of the [wholesale 

agreement], the Debtors may not reject the contract.”67 Accordingly, the District Court 

found that, following parties’ agreement that the Commission and bankruptcy courts have 

concurrent jurisdiction, it did not matter the order in which the rejection motions were 

considered.

Additionally, as the Commission discussed in the underlying orders,68 in 

FirstEnergy, the United States Bankruptcy Court for the Northern District of Ohio (Ohio 

Bankruptcy Court) recently issued a preliminary injunction, enjoining the Commission 

from requiring FirstEnergy Solutions Corporation (FirstEnergy), which had filed a 

petition for bankruptcy, to continue performing under certain wholesale power contracts 

that FirstEnergy sought to reject through bankruptcy.69 In that matter, the Ohio 

Bankruptcy Court found that the automatic stay provision of the Bankruptcy Code70 and 

 

65 Boston Generating, 2010 WL 4616243 at *2.

66 Id. at *3.

67 Id.

68 NextEra v. PG&E, 166 FERC ¶ 61,049 at P 27; Exelon v. PG&E, 166 FERC 

¶ 61,053 at P 24.

69 FirstEnergy, 2018 WL 2315916 (Bankr. N.D. Ohio May 18, 2018).

70 11 U.S.C. § 362(a) (2012).

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its power to grant equitable relief under the Bankruptcy Code71 support its decision to 

issue the preliminary injunction.72

In short, as described in the underlying orders, there is now a split among federal 

courts that have addressed the interaction between the Bankruptcy Code and the FPA,

73

and against this background, the Commission has had the opportunity to reevaluate its 

position with regard to this issue. The Commission expressly noted that, given these 

conflicting decisions, the state of the law was unsettled, and analyzed the relevant 

precedent.74 Based on this analysis, the Commission concluded that the way to give 

effect to both the FPA and the Bankruptcy Code is for a party to a Commissionjurisdictional wholesale power contract to obtain “approval from both the Commission 

and the bankruptcy court to modify the filed rate and reject the contract, respectively.”

75

Because of the split among federal courts in interpreting the interaction between the 

Bankruptcy Code and the FPA, we deny PG&E’s rehearing request asserting that the 

Commission failed to follow existing precedent.76

 

71 11 U.S.C. § 105(a) (2012).

72 This opinion is currently pending appeal before the United States Court of 

Appeals for the Sixth Circuit.

73 NextEra v. PG&E, 166 FERC ¶ 61,049 at PP 24-27; Exelon v. PG&E, 

166 FERC ¶ 61,053 at PP 21-24.

74 NextEra v. PG&E, 166 FERC ¶ 61,049 at P 25; Exelon v. PG&E, 166 FERC 

¶ 61,053 at P 20.

75 See supra P 16 (clarifying the meaning of this sentence).

76 For similar reasons, we believe that the underlying orders here are not an 

unexplained departure from USGen. We also note that USGen is distinguishable because, 

in that proceeding, the Commission’s jurisdiction was not in dispute. The non-debtor 

counterparty to the wholesale natural gas contract (i.e., the pipeline) filed a notice of 

termination and request for waiver regarding the relevant contracts requesting that the 

Commission waive its obligations under the contracts and permit it to treat the contracts 

as terminated upon the bankruptcy court’s approval of the debtor’s rejection. USGen, 

116 FERC ¶ 61,285 at P 4. The Commission approved, allowing the pipeline to remarket 

capacity. Id. (citing Tenn. Gas Pipeline Co., Docket No. RP03-603-000 at 2 (Sept. 25, 

2003) (delegated order)). 

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5. Authority to Command a Customer to Purchase Power

a. PG&E Rehearing Request

PG&E argues on rehearing that the Commission cannot, under the FPA, order a 

purchaser to buy power or take physical service.77 PG&E asserts that FPA sections 205 

and 206 focus exclusively on sellers and sales, and the FPA’s purpose is to prevent 

abuses of market power in a market that is historically characterized by a natural 

monopoly.78 By contrast, PG&E alleges that the procurement decisions of load-serving 

entities, and the actions of power purchasers in general, have never been an area of 

federal concern.79 PG&E distinguishes Blumenthal, where the Commission ordered a 

seller to specifically perform under a contract that it had sought to reject in bankruptcy, 

on the basis that it was again the Commission asserting jurisdiction over NRG Power 

Marketing, Inc. in light of its regulatory obligations as a seller.

b. Commission Determination

PG&E is correct in that the Commission’s jurisdiction over wholesale sales 

generally places the regulatory obligations of the FPA on the seller of wholesale power.80 

However, PG&E mischaracterizes the action that the Commission would take here; the 

Commission would not command a customer to purchase power, but rather, it would 

enforce a wholesale power contract, i.e., the filed rate. The FPA expressly permits rates 

to be set by contract,81 and so, while the regulatory obligations of filing a contract or 

obtaining market-based rate authority apply to the seller, the Commission’s jurisdiction 

over the wholesale sale attaches to the contract itself. The Supreme Court has made clear 

that, in order to protect the sanctity of rate-setting contracts, “[t]he standard for a buyer’s 

challenge to a contract must be the same, generally speaking, as the standard for a seller’s 

 

77 PG&E Rehearing Request at 21-23.

78 Id. at 21-22 (citing 16 U.S.C. §§ 824d, 824e; Morgan Stanley, 554 U.S. 527, 

531; E. Ky. Power Co-op, Inc. v. FERC, 489 F.3d 1299 (D.C. Cir. 2007) (Eastern 

Kentucky Power Co-op).

79 Id. at 22 (citing Midwest Indep. Transmission Sys. Operator, Inc., 113 FERC 

¶ 61,081, at P 53 (2005)).

80 See Eastern Kentucky Power Co-op, 489 F.3d at 1306 (the “entire thrust of Part 

II [of the FPA] is toward the seller at wholesale, not the buyer”) (alteration in original) 

(quoting Cal. Elec. Power Co. v. FPC, 199 F.2d 206, 209 (9th Cir. 1951)).

81 16 U.S.C. §§ 824d(c), 824e(a).

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challenge: ‘The contract rate must seriously harm the public interest.’”

82

 And rightfully 

so, because otherwise, purchasers would be free to abrogate or modify contracts without 

this Commission’s review or approval any time market forces favored the purchaser. 

Because the Commission’s jurisdiction attaches to wholesale power contracts, we find 

that the Commission has authority to enforce such contracts and order purchasers to 

continue to perform under the contracts, unless the purchaser is able to establish that the 

contract seriously harms the public interest or the Mobile-Sierra presumption otherwise 

does not attach to the contract.83 We therefore deny PG&E’s rehearing request.

The Commission orders:

(A) Docket Nos. EL19-35-001 and EL19-36-001 are hereby consolidated for 

the purposes of rehearing, as discussed in the body of this order.

(B) The untimely motions to intervene filed by Nevada Irrigation District, 

Crockett, and Hatchet Ridge are hereby denied, as discussed in the body of this order.

(C) PG&E’s rehearing requests are hereby denied, as discussed in the body of 

this order.

By the Commission. Commissioner McNamee is not participating.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.

 

82 Morgan Stanley, 554 U.S. at 548.

83 Id.

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