Vectren Corp. said last week that ProLiance Energy LLC, a gas marketing firm based in Indianapolis and co-owned by Vectren and Citizens Gas and Coke Utility, plans to appeal the verdict awarded last month to the gas utility department of the City of Huntsville, AL.
In February, a federal jury ordered ProLiance to pay Huntsville Utilities $33.5 million in damages for breach of a gas contract, fraud, conspiracy and other charges (see NGI, Feb. 14). The jury found that ProLiance violated a natural gas supply agreement with Huntsville by charging higher gas prices than were promised in the winter of 2000 and 2001 and then attempting to cover it up.
The verdict awarded the municipal utility $8.2 million in actual damages (which could end up being tripled), and $25 million in punitive damages. An award from federal racketeering charges (RICO) has yet to be determined.
Issues still pending before the trial court also include efforts by ProLiance to reduce the amount of the verdict. The court may issue its final rulings on the verdict by April or May. Formal action by ProLiance to appeal the verdict is expected if the verdict is not set aside by the court.
"ProLiance management believes there are reasonable grounds to set aside or appeal the verdict and will vigorously pursue its appeal rights," said Carl L. Chapman, COO of Vectren. "While it is not possible to predict the ultimate outcome, ProLiance has recorded a reserve of $3.9 million, reflective of their assessment of the lower end of the range of possible outcomes in the case and inclusive of estimated ongoing litigation costs. In 2003, ProLiance had fully reserved for amounts due from Huntsville Utilities for services rendered under the contract."
Headquartered in Indianapolis, IN, ProLiance is a natural gas marketer that serves natural gas customers in 18 states in the midwest and southeast.
As a result of the February verdict, Vectren reflected its $1.4 million after tax share of the charge in its 2004 results. The company said the recording of this charge reduced previously reported net income for both the three and 12 months ended Dec. 31, 2004 by $1.4 million and reported basic and diluted earnings per share in both periods by $0.02.
After the charge was factored in, Vectren said net income for the three and 12 months ended Dec. 31, 2004 is $40.1 million and $107.9 million, respectively. Earnings per share for the three and 12 month periods ended Dec. 31, 2004 is $0.53 and $1.43, respectively.
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