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Law360: Texas Top Court Will Tackle Wind Farm Contract Dispute
02/20/2012

Texas' highest court on Friday agreed to hear an appeal in a case centering on the enforceability of a liquid damages provision in a contract dispute between an Energy Future Holdings Corp. unit and three wind farms led by a predecessor of NextEra Energy Inc.

The Energy Future subsidiary, now known as Luminant Energy Co. LLC, first accused FPL Energy LLC of breaching its contract by failing to provide sufficient levels of wind energy from three West Texas wind farms. Luminant had agreed to a liquidated damages provision, meaning that there was a specific dollar sum attached to every megawatt not produced that the company would have to pay in damages, which Luminant intended to collect.

FPL, in turn, claimed that Luminant, then known as TXU Portfolio Management Co. LP, purposely clogged high-voltage transmission lines essential for the delivery of wind-turbine-generated electricity. FPL also argued that Luminant did not incur losses because the utility had covered for the electricity it did not receive from the wind farms by purchasing or producing electricity to fill the deficit.

An attorney for the wind farms said she was pleased the high court had granted review.

The case "involves Texas liquidated damages law, which is in a state of disarray, with conflicting standards that need to be clarified for both the parties and the state," said Nina Cortell of Haynes and Boone LLP...

FPL is represented by Nina Cortell, Anne M. JohnsonBen L. Mesches and Ryan Paulsen of Haynes and Boone LLP.

Excerpt from Law360, Feb. 17, 2012. To view the full article, click here (subscription required).