Peruvian Electricity Transmission Tariff Dispute


The Situation

A concessionaire alleged that the Peruvian government had violated a Legal Stability Agreement (LSA) relating to discrimination in the setting of compensation for electricity transmission service.

NERA's Role

The government of Peru retained NERA to represent its position before the International Center for Settlement of Investment Disputes. NERA produced an expert report addressing liability and damages estimates. The report provided insight on economic fundamentals in the case, including comparative electric utility regulatory systems, industry practice regarding electric sector concessions, and applicable compensation and damages issues. NERA's experts demonstrated the fallacy of using regulatory arguments in a commercial setting, noting the concessionaire's misrepresentation of the LSA and the unwarranted wealth transfer that its claim represented. The NERA report also showed that the claimant’s investment was an "integrated project" and proved that the company had benefited in the past from royalty reductions.

The Result

The tribunal ruled in favor of the government, stating that the fundamentals of claimant's case were wrong from a legal, commercial, and regulatory perspective. No damages were awarded.