Economic analysis or critique of damage claims requires expertise in economic theory and the use of appropriate statistical, econometric, and other data-intensive techniques. We have significant experience in the analysis of damages in contract litigation matters and are familiar with different vintages of natural gas contracts, having analyzed such contracts in a wide variety of settings over the past two decades.
The Brattle Group provided evidence in an arbitration involving the price of natural gas paid under the primary long-term contracts that supply natural gas to all of South Australia. We analyzed the current and likely future structure of the natural gas market in the southern and eastern states of Australia and the likely effects of market liberalization policies.
In another Australian price review arbitration, The Brattle Group reviewed over seventy-five natural gas contracts in South and East Australia, and developed a database of price and non-price terms comparable to the contract under review. We used this database to determine whether there had been a statistically significant change in gas prices in Australia over a 10-year period and to recommend an appropriate price for the contract under review. We also demonstrated the flaws in the regression analysis performed by the opposing witness.
In a jury trial in federal court, we testified as to the appropriate damage theory and amount of damages for the breach of a natural gas supply contract between a gas producer and marketer. The jury returned a verdict that adopted our damage estimate. On appeal, the federal appeals court affirmed the jury verdict and cited The Brattle Group’s damage theory for its consistency with legal principles associated with the “anticipatory repudiation” of long-term contracts.
On behalf of the settling claimants (California electric and gas utilities, Western states, and California consumers) in a $1.6 billion natural gas antitrust settlement with El Paso Corporation and its subsidiaries, The Brattle Group quantified both the damages sustained and the settlement consideration to be allocated to each major settling claimant group. We developed a methodology to allocate the settlement consideration according to the relative damage incurred by each major claimant group from anticompetitive natural gas prices at the California border, taking into account overpayment for natural gas and the indirect effect of higher natural gas costs on the market price of electricity.
The Brattle Group also designed and processed the claims forms for the two dozen California municipal electric and gas utilities participating in the settlement. This entailed a careful review of electricity and natural gas purchases and sales and associated contractual agreements. We provided industry background and valuation expertise to the settlement administrator for industrial gas users’ claims, and assisted the administrator in the design of the claims form that was sent to hundreds of industrial customers seeking settlement compensation.
Published in Law360