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Energy Future court agrees to reconsider NextEra termination fee order
By Caroline Salls
Pittsburgh, Oct. 3 – The court overseeing Energy Future Holdings Corp.’s Chapter 11 case will reconsider a September 2016 order approving a NextEra Energy, Inc. $275 million termination fee because that order “was based upon a fundamental misapprehension of critical facts,” according to an opinion filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.
As previously reported, the fee was included in NextEra’s agreement to purchase Energy Future’s economic interest in Oncor Electric Delivery Co, LLC.
The purchase agreement with NextEra was terminated earlier this year after the transaction failed to obtain the approval of regulatory officials in Texas.
“The court’s misunderstanding was based upon imprecise and incorrect testimony by the debtors’ witness, incomplete responses by debtors’ counsel to questions by the court and conspicuous and unhelpful silence by the beneficiary of the termination fee, NextEra,” judge Christopher J. Sontchi said in Tuesday’s opinion.
“However, the ultimate responsibility for the court’s mistake lies with the court itself. The court simply missed the critical nuance between when the termination fee would be payable and when it would not be.”
If the court had properly understood the facts, Sontchi said it would not have approved the payment of the fee under the present circumstances “nor could it.”
The judge said that, at the time the fee was approved, it did not satisfy the standard for payment because there could not be any actual benefit to Energy Future’s estate by payment of the fee.
“Indeed, payment of the termination fee at this time would be extremely harmful to the debtors’ estates,” Sontchi said.
The parties were directed to submit proposed forms of order related to the reconsideration of the 2016 order by Oct. 10.
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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