Mirant Chapter 11 Judge: Wants Pepco Dispute in His Court
Tuesday September 30, 7:32 pm ET
Dow Jones Newswires
NEW YORK -- The judge overseeing Mirant Corp. (NYSE:MIR - News)'s bankruptcy proceeding recommended Monday that he retain jurisdiction offer the company's effort to reject an electricity contract with a utility unit of Pepco Holdings Inc. (NYSE:POM - News) , according to court documents.
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Judge Dennis Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas also said that the federal district court in the same Texas district should decide whether to continue blocking federal energy regulators from intervening in Mirant's efforts to shed the Pepco agreement.
Judge Lynn's recommendation to the U.S. District Court of the Northern District of Texas in Fort Worth came almost a month after Pepco and the Federal Energy Regulatory Commission asked the district court to take up the electricity contract dispute.
Judge Lynn, earlier this month effectively extended a temporary restraining order he had issued in late August that prevented Pepco and FERC from fighting Mirant's contract rejection request.
Pepco filed an appeal Monday with the district court on that so-called injunctive relief.
The district court must now decide whether to follow Judge Lynn's recommendation or make its own decision.
The Mirant-Pepco dispute centers on agreements though which Mirant reimburses Pepco, at above-market rates, for electricity the utility purchases from third parties.
Mirant, which filed for Chapter 11 protection in July, has said the contracts are causing it to lose money and hurting its efforts to restructure.
Bankruptcy courts typically allow companies a great deal of latitude in rejecting contracts that hinder their restructuring efforts. FERC and others have argued, however, that the Federal Power Act gives the commission authority to rule on matters involving wholesale power contracts. The law isn't clear on who has ultimate authority.
-By Kristen McNamara, Dow Jones Newswires; 201-938-2061; kristen.mcnamara@dowjones.com
