Cases & Deals

AEP receives $263 million settlement after prevailing on breach of 20-year power contract claim

Clients American Electric Power Company, Inc. (AEP)

Jones Day represented American Electric Power Company, Inc. (AEP) on competing breach of contract claims. In September of 2003, AEP and Tractebel each filed actions in the Southern District of New York asserting claims for breach of contract arising out of Tractebel's repudiation of a 20-year agreement under which AEP was to sell Tractebel electric power from an 820 megawatt co-generation facility AEP constructed at the Dow Chemical complex in Plaquemine, Louisiana. After AEP successfully obtained dismissal of one of Tractebel's claims on summary judgment, the case proceeded to a bench trial in March 2005. The District Court ( Judge Harold Baer Jr.) rejected Tractebel's arguments that AEP had acted in bad faith or otherwise breached the agreement. Instead, the Court held that Tractebel was in breach and awarded AEP $123 million in damages.

On appeal to the Second Circuit Court of Appeals, AEP successfully argued that the trial court's liability determination should be affirmed. In addition, AEP prevailed on its argument that the District Court's damage award failed adequately to compensate AEP for its losses such that the case should be remanded to the District Court for further consideration of AEP's damages. After remand, the District Court scheduled a new trial on damages. A few days before that trial, the parties settled the case, with AEP receiving a total payment of $263 million.

Tractebel Energy Marketing, Inc. v. AEP Power Marketing, Inc., and Ohio Power Co. v. Tractebel Energy Marketing, Inc., 2005 WL 1863853 (S.D.N.Y. 2005), aff'd in part, reversed in part and remanded, 487 F. 2d 84 (2d Cir. 2007)

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