Calpine sues Reliant Energy unit

Calpine Corp. is suing a Reliant Energy Inc. unit for more than $10.57 million, claiming the unit breached an energy purchase contract.

Reliant Energy Electric Solutions LLC "grossly inflated" its losses and has refused to pay the $10.57 million it still owes under the contract, Calpine said in a lawsuit filed Tuesday with the U.S. Bankruptcy Court in Manhattan.

Although it emerged from a two-year stint in bankruptcy in January, Calpine filed the suit with the bankruptcy court because it says the inflation wiped out debt Reliant Energy Electric owed it before the bankruptcy case and improperly gave the energy buyer a $2 million claim in the case.

A contract signed in March 2003 obligated the Reliant Energy unit to buy energy products from a Calpine unit through Dec. 31, 2007. The deal, however, allowed the unit to walk away from the pact when Calpine sought Chapter 11 protection in December 2005.

Shortly after Calpine's bankruptcy filing, Reliant Energy Electric terminated the deal and estimated its loss at about $62.3 million. Offsetting that amount against the $60.5 million it owed Calpine at the time of the filing, the company asserted a claim of about $2 million against Calpine.

Calpine, however, said the Reliant unit failed to estimate the value of the terminated deal in a "commercially reasonable manner," and instead grossly inflated its value by using "stale" energy prices.