Energy Future files suit to avoid paying $275 million fee to NextEra

By Caroline Salls

Pittsburgh, Aug. 3 – Energy Future Holdings Corp. and Energy Future Intermediate Holding Co., LLC filed a lawsuit that asks the U.S. Bankruptcy Court for the District of Delaware to rule that the Energy Future entities do not owe a $275 million termination fee to NextEra Energy, Inc.

Energy Future said NextEra agreed, in exchange for the termination fee, to use “reasonable best efforts” to secure regulatory approval from the Public Utility Commission of Texas for the purchase of the Energy Future debtors’ indirect interest in regulated electric utility Oncor.

“But NextEra failed to live up to its end of that bargain,” the lawsuit said. “Not only did NextEra fail to obtain regulatory approval from the PUCT, which was harmful enough, but NextEra failed in the first instance to conduct itself in a manner reasonably calibrated to ever obtain that regulatory approval.”

Energy Future said NextEra employed aggressive tactics “that were destined to fall short” of the goal of obtaining regulator and stakeholder support for the proposed transaction.

Specifically, Energy Future alleged that, despite failing to win the necessary support, NextEra announced to the commission that it had “drawn a line in the sand that it was not willing to discuss or modify in any way.”

In addition, NextEra indicated that its interests in Texas were to maximize its own gain, and frustrate the commission’s goals, when NextEra used its rights under a side letter with Oncor “to scuttle a deal in which the PUCT had significant interest,” Energy Future said in the lawsuit.

As a result, Energy Future said the commission declined to approve the Oncor transaction.

According to the lawsuit, NextEra appears to believe that all it was required to do was provide the regulatory commitments included in the merger agreement to the commission “and demand an answer.”

“That is not reasonable best efforts,” Energy Future said.

Energy Future is a Dallas-based power generation company and utility operator. The company filed for bankruptcy on April 29, 2014. The Chapter 11 case number is 14-10979.

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