FPL Energy, LLC v. TXU Portfolio Mgmt. Co., L.P. (Opinion)Annotate this Case
TXU Portfolio Management Company (TXU) entered into a contract with FPL Energy, LLC to receive electricity and renewable energy credits (RECs) from wind farms owned by FPL. After FPL failed to provide the electricity and RECs, TXU filed a breach of contract action against FPL. FPL counterclaimed, arguing that TXU failed to provide it with sufficient transmission capacity. The trial court granted two partial summary judgments declaring (1) the contracts required TXU to provide transmission capacity, and (2) the contracts’ liquidated damages provisions were unenforceable. After a jury trial on the remaining issues, the trial court entered take-nothing judgments for both parties. The court of appeals reversed both summary judgment rulings. The Supreme Court (1) affirmed the court of appeals’ holding that TXU owed no contractual duty to provide transmission capacity; but (2) reversed the portion of the court of appeals’ judgment regarding liquidated damages, holding that the liquidated damages provisions applied only to RECs and were unenforceable as a penalty. Remanded for a determination of damages.