FERC’s Say in Bankruptcy Gets New Test in FirstEnergy Case

Bankruptcy judges will have to learn to work in harmony with federal energy regulators in determining the fate of bankrupt power companies’ large contracts due to a recent federal appeals court decision.

The U.S. Court of Appeals for the Sixth Circuit ruled last month that bankruptcy courts have the authority to reject electricity purchase agreements that bankrupt utilities want to escape. Courts must first consider the public interest and allow the Federal Energy Regulatory Commission to review the agreements and voice its opinion, the Sixth Circuit said.

FERC’s authority to regulate the transmission and sale of natural gas and electricity—which ...