Coal producer Massey Energy Co. said it will pay $10.6 million to end a contract dispute with Duke Energy after an arbitrator ruled in favor of the Charlotte, NC-based energy company.

Duke Energy called for the dispute to be arbitrated in 2001 after Richmond, VA-based Massey claimed it was unable to meet its obligations under its coal contract with Duke due to force majeure events that year. The arbitration hearings were held in December 2002.

“It is the company’s understanding that the arbitrator acknowledged that Massey had experienced an event of force majeure, but determined that Massey was obligated by the terms of the contract to ship replacement coal to Duke from other designated supply sources,” Massey said in a prepared statement.

“We are obviously disappointed with the ruling and believe we acted in good faith at the time of the events and throughout the arbitration process,” said Massey Chairman and CEO) Don L. Blankenship. “However, we are pleased to be able to put the dispute behind us.”

Duke Energy “felt the issue was worth pursuing for the benefit of our power [customers],” said Duke spokesman Randy Wheeless. “We felt they should compensate us for the replacement coal we had to purchase.”

Blankenship said Massey will take a pre-tax charge of $10.6 million, or eight cents a share, in its four quarter results as a result of the arbitration ruling. Analysts predicted the company’s earnings per share (EPS) for the fourth quarter would range between a loss of 2 cents and 8 cents, with a consensus estimate of 2 cents, according to Thomson First Call.

Massey, the fifth largest coal producer in the U.S. based on revenue, reported it will announce its fourth quarter and 2002 financial results on Thursday.

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