A U.S. district court judge last week said that he would defer to FERC’s authority in ruling on whether bankrupt NRG Power Marketing must comply with contractual obligations to provide electricity to Connecticut Light & Power (CL&P).

The order by U.S. District Court Judge Richard Casey drew swift praise from Connecticut Attorney General Richard Blumenthal. The ruling “means that NRG cannot bully regulators by misusing the power of the bankruptcy court to evade its contractual obligations to consumers,” he said. “We will fight tenaciously to uphold this federal court ruling against anticipated appeals by NRG.”

Blumenthal said that the ruling has “national significance as a precedent for other states and power suppliers because it properly recognizes that the FERC, not the bankruptcy court, has sole authority to rule on NRG’s misguided efforts to avoid its legal obligations to consumers.”

Casey last month issued an order allowing NRG Power Marketing to temporarily cease supplying power to CL&P under a standard offer service contract retroactive to June 2, until a court hearing was held. Casey declined to make an immediate ruling on the case following arguments made before him by representatives from FERC, NRG and CL&P.

The Federal Energy Regulatory Commission last month ordered NRG Power Marketing to continue providing power to CL&P until the Commission decides whether NRG Power Marketing’s efforts to cancel a power contract with CL&P meet the Mobile-Sierra “public interest” standard (see NGI, June 30). FERC’s ruling responded to a joint complaint filed by Blumenthal and the Connecticut Department of Public Utility Control.

According to published reports, Casey — in deferring to FERC — said that only a U.S. Court of Appeals can reverse FERC’s actions as it relates to the power contract dispute.

NRG Power Marketing in May told CL&P that it wanted to terminate a contract, effective May 19, under which NRG Power Marketing is obligated to supply 45% of CL&P’s standard offer service load requirement through the end of 2003 at an average cost of 4.5 cents/kWh. CL&P is a subsidiary of Northeast Utilities.

Meanwhile, an analyst with Charles Schwab Capital Markets last Monday said that the “odds are heavily in favor” of a federal district court ultimately siding with a bankruptcy court in the brewing jurisdictional clash with FERC over the power contract squabble.

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