Two of the biggest players in the California energy market have filed papers with a New York bankruptcy court seeking to block Calpine Corp. (CPNLQ) from using its insolvency to get out of power-supply contracts.

Both Southern California Edison, a unit of Edison International Inc. (EIX), and the California Department of Water Resources (CDWR) filed papers with the court on Wednesday seeking more time for research and interviews, and more hearings on whether Calpine could reject certain contracts.

In addition, Edison filed, and the CDWR said it would file, a motion to withdraw the question of the contract rejection from the bankruptcy court entirely and move it to a district court for a decision on whether the Federal Energy Regulatory Commission has any jurisdiction on the contract rejection.

Calpine, in one of its first motions in bankruptcy court, sought the authority to reject eight "financially burdensome and unprofitable" contracts, under which it said it would lose $1.2 billion over their remaining terms.

Among the eight contracts are one to provide 1,000 megawatt hours of electricity to the CDWR through December 31, 2009, and another to sell Southern California Edison 200 megawatts of electricity through April 1, 2013.

"Rejecting the Unprofitable Contracts is critical to Calpine's long-term financial viability and, thus, is essential to Calpine's prospects to reorganize successfully," Calpine said in the initial rejection motion.

But Edison, in its Wednesday filing, said the parties involved in the potential contract rejection need more time to conduct discovery. The company also noted that the official creditors' committee has not yet been formed and so has not been able to consider how the rejection would affect the larger bankruptcy estate.

Separately, Edison moved for an order to withdraw the case from bankruptcy court to a federal district court so the issues related to FERC's jurisdiction over the contracts could be decided. Edison and CDWR are seeking either a postponement or a stay of the scheduled January 5 hearing on the contracts.

Calpine filed for bankruptcy on December 20, declaring more than $26 billion in assets and more than $22 billion in debts. The company expanded rapidly in the 1990s but found itself struggling with a heavy debt burden and weak power markets after the California energy crisis and Enron's 2001 collapse.