The US wind investor today submitted a letter to senior Polish government officials, including its President and Prime Minister, accusing the government of unlawfully terminating the 15-year power deals.
Invenergy claims a subsidiary of Tauron Polska Energie — the utility majority owned by the Polish state — "destroyed the financial viability" of Invenergy’s investments in four projects, with damages amounting to approximately $700 million (€592.17 million).
Tauron began proceedings to liquidate the subsidiary, thereby annulling any power deals, in July 2014 but this liquidation was never formally completed.
The utility insists the liquidation process was and is "in line with Polish law, foreign investment protection, contract loyalty principles and good trading habits".
But Invenergy claims the Polish government took deliberate actions to depress renewable energy market prices to unsustainable levels. In July of this year, Invenergy launched legal proceedings against the utility.
The company had entered into fixed-price, long-term energy contracts with Tauron in 2010, accepting what were then below-market prices in return for a stable revenue scheme, it said.
The government later instructed the utility’s subsidiary Polish Energy-First Trading Company to terminate the contracts, according to Invenergy.
In a statement, the investor added it was forced to sell its production into the market at prices significantly lower than the contracted amounts, resulting in major financial loss.
Invenergy claims this breached investment protection obligations under the US-Poland Bilateral Investment Treaty and the Energy Charter Treaty.
The company today stated its intent to submit the dispute to international arbitration if no settlement is reached within six months.
Invenergy chief legal officer Michael Blazer said: "While the Polish government’s disregard for the rule of law continues to escalate, we are working to secure our rights, and other investors are watching."
In November 2014, five months after it started the liquidation of its subsidiary, Tauron stated, that for creditors, it was "irrelevant" whether the Polish Energy-First Trading Company was liquidated or not.
The statement continued: "The principles of contractual loyalty and good trade habits and the nature of the bilateral agreement mean that the risk of potential adverse events affecting the stability of cooperation affects both parties to the agreement and not just one.
"An honest and loyal contractor cannot claim that if a contract brings losses to his partner, that is the only problem for that partner.
"Then we are not dealing with a contractual partner, but a hard creditor who, irrespective of the consequences for the other party, refuses to adapt the terms of the contract to the changed market situation."