In 2008 and 2010, the Nebraska Public Power District (NPPD), the largest electric utility in Nebraska, contracted for 20-year supplies of wind power with the Elkhorn Ridge, Crofton Bluffs, Laredo Ridge, and Broken Bow wind power facilities (“Wind Facilities”). The contracts, known as power purchase agreements (PPAs), included restrictions on the transactions permitted by the owners of the Wind Facilities, and they stated that the owners must not change control or assign any of the rights or obligations under the PPAs, unless such a transaction was expressly approved in writing by NPPD.

In 2014 and again in 2018, the Wind Facilities were sold in entirety to new owners without the approval of NPPD. On 11 January 2019, NPPD provided written notice to each of the Wind Facilities that such transactions had violated the PPAs and that NPPD intended to terminate the PPAs. On 30 January 2019, the Wind Facilities jointly filed a complaint against the NPPD before the US District Court (District of Nebraska), and asked the Court for declaratory and injunctive relief regarding NPPD’s intention to terminate the PPAs.

NERA was asked by a law firm representing NPPD to evaluate whether the sales of the Wind Facilities that occurred in 2014 and 2018 were in breach of the terms of the PPAs and, if so, to assess the economic damages that had accrued to NPPD.

To assess whether the sales of the Wind Facilities in 2014 and 2018 were in breach of the terms of the PPAs—that is, to assess whether the Wind Facilities had “changed control” in 2014 and 2018—NERA reviewed in detail the PPAs themselves and the ownership structures of the Wind Facilities prior to and after each transaction. NERA determined that each transaction constituted a change of control of the Wind Facilities. In each case, new officers appointed by senior personnel employed by the new ultimate parent company controlled all business affairs of the Wind Facilities.

To estimate economic damages that had accrued to NPPD, NERA evaluated the payments that NPPD had made to the Wind Facilities under the PPAs and the payments that NPPD would have made had it renegotiated the PPAs in 2014 and 2018. The prices established in the PPAs were consistent with the average market prices for wind PPAs in 2008 and 2010 for wind facilities in the US Midwest. Under the prices established in the PPAs, the Wind Facilities in total earned about $499 million (2018 dollars) through October 2020.

Had NPPD renegotiated the terms of the PPAs in 2014 and 2018, the renegotiated prices would have reflected prevailing market prices for wind PPAs in 2014 and 2018, which were much lower than market prices in 2008 and 2010. NERA estimated that the Wind Facilities in total would have earned $295 million through October 2020 under renegotiated lower PPA prices. Thus, NERA concluded that NPPD paid an excess of $204 million ($499 million - $295 million).

On 13 April 2020, the Court issued a summary judgment that the changes in ownership of the Wind Facilities had not constituted breaches of the terms of the PPAs, partly on the basis that termination of the PPAs would have caused irreparable economic harm to the Wind Facilities.