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Not Just Any Decision: The Ongoing Power Struggle Between Bankruptcy Courts and State Regulators

The Fifth Circuit Court of Appeals’ decision in ERCOT v. Just Energy Texas, L.P. is notable in its own right for addressing critical issues regarding who has authority to regulate a state’s electric utilities. But the case is even more interesting when considered in the broader mosaic of recent decisions by courts dealing with how and when state regulatory power may be circumscribed by federal bankruptcy courts.

Just Energy’s $335M Bankruptcy Dispute at Fifth Circuit

In yet another example of the massive complex litigation stemming from 2021’s Winter Storm Uri, the U.S. Court of Appeals for the Fifth Circuit is being asked to balance the usually broad authority of federal bankruptcy judges in restructuring cases against the potential sovereignty of Texas energy regulators to set rates. Canadian energy retailer Just Energy and the ERCOT squared off Tuesday before a three-judge panel in a dispute over whether a Houston bankruptcy judge can order ERCOT to repay Just Energy up to $335 million from payments made following the February 2021 storm.

Talen Energy Bankruptcy Inches Toward Resolution

Lawyers for Talen Energy and its creditors say they are “powering forward” toward a Dec. 15 confirmation hearing that will begin The Woodlands-based company’s exit from bankruptcy. Talen and most of its creditors have until the end of business on Dec. 6 to obtain votes of approval of the proposed plan from claim holders that would eliminate $1.4 billion and make the bondholders owners of the business. Opponents of the plan must file objections that same day, Dec. 6.

Bankruptcy Judge ‘Conditionally Approves’ Brazos Disclosure Agreement After Intense Hearing

Over the objection of a single power generator and distributor, U.S. Bankruptcy Chief Judge David Jones of Houston gave “conditional approval” of a multibillion-dollar preliminary settlement agreement – aka a “disclosure statement” – in the Brazos Electric Power Cooperative bankruptcy case. The 74-minute hearing was intense at times because of an exchange with a lawyer for South Texas Electric Coop, but Judge Jones said Brazos’ “very complicated” 172-page proposed agreement “strikes a very nice balance.”

Brazos Electric Bankruptcy Heads to Finish Line

Brazos Electric Power Cooperative is expected to file a final plan within days with a Houston judge that will map the Central Texas power supplier’s road out of bankruptcy and toward financial stability, according to lawyers involved in the litigation. The proposed plan reduces the amount that Waco-based Brazos owes ERCOT by hundreds of millions of dollars, requires Brazos to sell three of its power plants, creates a fund for low-income residents struggling with high electric bills and raises more than $1.5 billion in financing, according to court documents filed in the case.

Brazos Legal/Financial Advisor Fees Hit $80M

As Brazos Electric Co-op edges closer to a solution in its $1.9 billion bankruptcy case, the Waco-based power retailer is discovering the cost of getting a resolution is not cheap. The lawyers and financial advisors working on the Brazos restructuring for the past 15 months have already billed nearly $80 million for their services, according to court records. The final price tag will likely exceed $100 million, according to lawyers involved in the case. The Texas Lawbook has the details.

Brazos Electric Co-op Nears Deal in Bankruptcy

Brazos Electric Power Cooperative has reached an agreement in principle with most of its creditors that could result in the Waco-based power supplier exiting bankruptcy by fall. The agreement, which has the support of ERCOT and power generators such as Calpine, calls for Brazos to sell some assets, provides concessions from the power generators and allows Brazos to exit bankruptcy with its co-op structure. But there are still major hurdles ahead.

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