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ProLiance to Pay Huntsville Utilities $21.6M to Settle Lawsuit

ProLiance Energy LLC, a natural gas market co-owned by Vectren Corp. and Citizens Gas and Coke Utility, has agreed to pay $21.6 million to settle a 2002 civil lawsuit arising from a contract dispute with Huntsville Utilities of Alabama.

The Huntsville Gas Board and the City Council on Tuesday approved the settlement for the utility company, which sued ProLiance in 2002 alleging it engaged in illegal business practices that lead to the overbilling of the utility's natural gas customers during the winter of 2000-2001. Huntsville Utilities charged that ProLiance violated the Racketeer Influenced and Corrupt Organizations Act (RICO).

In April 2005, a federal jury awarded Huntsville Utilities more than $33 million in damages, including attorneys' fees and expenses. ProLiance appealed the decision to the Court of Appeals for the 11th Circuit in July of that year. In a cross-appeal, Huntsville Utilities sought to increase the judgment to $54 million. The appellate court ordered mediation that subsequently resulted in the $21.6 million settlement.

Huntsville Utilities' officials said that $10 million of the settlement would be returned to natural gas customers in the form of a refund. "We expect refund amounts to be $75 to $120 for residential customers," said utility spokesman Bill Yell. The remainder of the settlement will be used to restore operating funds for the gas system, to complete delayed capital projects and to cover legal costs, according to the utility.

"The unprecedented high energy costs that occurred in the winter of 2000-2001 prompted a great deal of dispute and litigation across the nation. Unfortunately, this particular dispute could not be resolved without litigation and ultimately mediation," said Vectren COO Carl L. Chapman.

"We remain confident in ProLiance's ability to continue as a leading gas marketer as evidenced by the recent Mastiogale Natural Gas Customer Value Study, which rated ProLiance as the top-ranked natural gas marketer in the country," he noted (see Daily GPI, Nov. 7).

ProLiance said earnings for the fiscal year ended Sept. 30 are expected to be approximately $79 million, after recording a settlement charge of $18.3 million to increase its book reserve to $21.6 million. ProLiance earnings were $53.2 million for the same period in 2005. Evansville, IN-based Vectren is a 61% equity investor in ProLiance and will reflect its share of the net charge, $6.6 million after tax, or $0.09 per share, in its fourth quarter results.

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