$123 million damages for AEP

A judge has ruled in favour of American Electric Power in its suit against Tractebel Energy Marketing regarding a contract related to a Louisiana power generating facility.


A federal judge has ruled in favour of American Electric Power in its suit against Tractebel Energy Marketing (now known as Suez Energy Marketing) regarding a contract related to a Louisiana power generating facility completed by AEP in 2004.



Federal District Court Judge Harold Baer Jr, of the US District Court for the Southern District of New York, ruled that Tractebel breached the contract and awarded AEP damages of $123 million, plus pre-judgement interest. The court, however, disallowed AEP´s claimed damages for lost profits.



The ruling relates to a contract between AEP and Tractebel, executed in November 2000, in which Tractebel received 20 years rights to 800 megawatts of power from a plant built by AEP at The Dow Chemical Company´s Plaquemine, Louisiana, chemical complex. In return for the rights to the output, Tractebel was required to take 620 megawatts and pay a fixed monthly capacity payment to AEP.



“We’re pleased that the court recognised that AEP acted in good faith in its dealings with Tractebel,” said Michael G. Morris, AEP´s chairman, president and chief executive officer.



“AEP would not have gone forward with the construction of the project without a buyer for the large quantities of electricity that were not needed by the chemical complex,” Morris said. “Tractebel´s decision to breach the contract damaged AEP. The court obviously recognised that.”



Seperately, Reliant Energy has reached an agreement to sell its 505-megawatt, natural gas-fired power plant located near Huntington, West Virginia to Appalachian Power Company, an affiliate of American Electric Power, for $100 million.



The facility, known as Ceredo, was brought online in June 2001. It is a simple-cycle peaking facility with six combustion turbines. Reliant acquired the plant as part of its acquisition of Orion Power Holdings in February 2002. It is the only plant the company owns in West Virginia.



The company expects the sale to be completed in late 2005 or early 2006, subject to regulatory approvals.