Haynes and Boone in Law360: Texas Justices Blow Away $29M Wind Energy Credit Penalty


The Texas Supreme Court said Friday that an Energy Future Holdings Corp. unit’s contract for renewable energy imposed an unreasonable $29 million penalty against a predecessor of NextEra Energy Inc., rendering the damages provision unenforceable.

Partially reversing a Fifth District Court of Appeals ruling, the high court said that Energy Future subsidiary Luminant Energy Co. LLC unfairly benefited from the agreement's liquidated damages provision applying to underdelivery of renewable energy credits, because it forced FPL Energy LLC to pay a penalty far above the market value of the RECs.

“When the liquidated damages provisions operate with no rational relationship to actual damages, thus rendering the provisions unreasonable in light of actual damages, they are unenforceable,” the state high court said in a 24-page opinion. “Because the liquidated damages provisions operate as a penalty, we hold the provisions unenforceable...”

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

Excerpted from Law360, March 24, 2014. To view full article,click here (subscription required).

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