FirstEnergy Solutions Corp. Named in Breach of Contract Class Action

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An Ohio-headquartered baking company is the named plaintiff in a proposed class action that alleges FirstEnergy Solutions Corp. (FES) should be on the hook for damages allegedly resulting from a breach of contract between the energy generator and supplier and proposed class members.

The 17-page lawsuit claims Schwebel Baking Company and proposed class members across six states purchased energy from the defendant pursuant to a fixed-price supply agreement. The case says that, per this contract, only very limited circumstances would permit the defendant to “pass through” an increase in electrical charges, namely if “a regional transmission organization, an electric utility, an industry reliability organization, a court, or governmental entity” imposed certain changes to warrant a price increase.

The complaint claims the ostensible breach of contract—i.e. a steep energy price increase—stemmed from an “unusually cold winter” that hit the East Coast in January 2014.

“Nothing in the Fixed-Rate Agreement permits FES to pass through an increase in electrical charges to its customers because of an unusually cold winter,” the case argues. “In fact, the only weather-related provision that FES included in its agreement was its ‘firce majeure’ clause, which excuses a party’s non-performance due to ‘flood, earthquake, storm, fire, lightning’. Notably, cold weather is not mentioned.”

Summarily, the lawsuit contends that a very cold winter does not excuse the defendant from failing to hold up its end of its Fixed-Rate Agreements with customers. The price increase, in truth, was the result of “an increase in the market price of electricity” caused by an increase in demand during the harsh January 2014 winter, “precisely the type of market fluctuation in price that FES customers protected themselves against” when they entered into a fixed agreement with the defendant, the lawsuit claims.