Bankruptcy Court Ruling on Electricity as a "Good"

Bankruptcy Court Ruling on Electricity as a "Good"

February 16, 2017

By Jeremy Weinstein, Law Offices of Jeremy Weinstein

A Denver Bankruptcy Court, in an exhaustive, 40-page opinion, ruled that electricity is a “good” for purposes of Section 503(b)(9) of the Bankruptcy Code. 

Section 503(b)(9) assigns administrative priority for “goods” delivered in the 20 days pre-petition.  Pursuant to this ruling, an electric utility now has excellent legal authority when seeking administrative priority for the power provided during the 20 day period preceding a customer’s bankruptcy filing.

The Judge’s opinion is a tour de force on the broad legal issue on whether electricity is a “good” or a “service.”  He examines many definitions of “good,” including the dictionary, the UCC, and even federal statutes such as the Robinson-Patman Act. The debtor argued that electricity was a “service,” noting state electric tariffs that refer to utility “service.” 

PacifiCorp presented as evidence that electricity “moves,” and is therefore “movable”, which is the meaning of “good” under the U.C.C., the expert testimony of a brilliant physics professor/patent attorney who is on a first-name basis with Stephen Hawking. 

The debtor’s attorney happened to be the son of a Nobel Prize winner who had the 4th law of thermodynamics named after him, so the cross-examination was far-ranging.  However, the Court was not confused.

The Opinion is a great resource on the subject of electricity as a “good” or “service.”  The transcript of the hearing is also provided as a further resource.