ELR Citation: 47 ELR 20034
No(s). 16-1254 (4th Cir. Mar 9, 2017)

The Fourth Circuit upheld over $22 million in damages that an energy company was ordered to pay to a Virginia utility because the coal supplied to a new power plant was of such poor quality it couldn't initially be used. When the plant was commissioned, the utility entered into an option contract to purchase coal from the energy company. The utility needed coal that would be acceptable performance fuel to test the plant’s operating capacity and comply with environmental regulations. Upon delivery it was discovered that the quality of the coal was far below what was contracted. The utility filed in district court for damages and was awarded $22 million. The energy company appealed, arguing that the utility did not demonstrate how it was injured by the nonconforming delivery. The appellate court disagreed, pointing to the cost of extensive testing of the energy company's subpar product, and the utility's cost incurred obtaining modifications to its environmental permits and locating alternative suppliers. The lower court ruling was affirmed.