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Appellate court affirms injunction keeping NPPD from ending power contracts with wind farms
Credit: Lori Pilger | Lincoln Journal Star | Aug 25, 2021 | journalstar.com ~~
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The 8th Circuit Court of Appeals has affirmed a federal judge’s order blocking Nebraska Public Power District from canceling power purchase agreements with four wind farms in the state.
The publicly owned utility had argued that Elkhorn Ridge Wind LLC, Laredo Ridge Wind LLC, Broken Bow Wind LLC and Crofton Bluffs Wind LLC had violated the agreements by transferring control of their parent company’s ownership interests without their consent.
NPPD wanted out of the agreements they signed in 2008 to purchase all of the energy they produced for 20 years.
In response, the wind farms filed lawsuits in 2019 seeking a permanent injunction to stop NPPD.
According to the three-judge panel’s decision Tuesday, each of the entities owns and operates its own wind-energy-generation facilities and sits at the bottom of a multi-tiered ownership structure.
While they initially were built, owned, operated and maintained by Edison Mission Energy, from the start, their operations and maintenance were outsourced to third parties.
In 2012, Edison filed for bankruptcy protection, and NRG Energy Inc. bought the affiliates, making the wind farms subsidiaries of NRG Energy Gas & Wind Holdings Inc.
In 2018, NRG sold a subsidiary to Global Infrastructure Partners (GIP), which became the wind farms’ new parent company.
After the sale, NPPD served notices of default seeking termination of their power purchase agreements.
And the wind farms filed the lawsuits in U.S. District Court of Nebraska.
Last year, U.S. District Judge Laurie Smith Camp said the wind farms had shown “as a matter of law that they did not default on their obligations under the PPAs.”
Because of that, she wrote, “NPPD is permanently enjoined from terminating the PPAs in reliance upon its alleged events of default.”
NPPD appealed to the 8th Circuit Court of Appeals, which on Tuesday agreed with Smith Camp’s ruling.
Judge L. Steven Grasz of Omaha, one of the three 8th Circuit judges who heard the case, said the panel concluded that the transfer of ownership interests of the wind farms’ parent companies did not trigger the change-of-control provision in the PPAs.
A corporate parent that owns shares of a subsidiary does not traditionally own or have legal title over the subsidiary’s assets, he wrote.
In addition, Grasz said, the wind farms convincingly argued that termination of the PPAs would eliminate their only customer and source of income, thereby causing irreparable harm by defaulting to multiple investors and requiring them to immediately pursue bankruptcy relief.
“Finally, there is a strong argument that the public interest favors the preservation of the Project Entities over allowing NPPD to escape the benefit of the bargain. Accordingly, we uphold the district court’s permanent injunction,” Grasz wrote in the order.
NPPD could still request review by the full circuit.
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