Shock waves from the deep freeze that swept Texas in February continue to reverberate through the energy industry, threatening a stake in a Texas wind farm held by funds managed by investment firm BlackRock Inc., WSJ Pro Bankruptcy reported. A New York judge heard arguments yesterday in a dispute between BlackRock-controlled Mariah Del Norte LLC, a wind venture knocked offline during the February storm, and Citigroup Inc., which billed nearly $100 million on an electricity hedge. That amount represents Citi’s costs for buying electricity to cover the power Mariah failed to deliver, according to court papers. At a hearing yesterday in the Supreme Court of New York County, Judge Robert Reed said he would hear evidence at a trial to be scheduled soon on Mariah’s request to prohibit Citi from taking action after it called a default over the wind farm’s failure to pay. Many wind farms in Texas, to get construction financing, enter into long-term hedged contracts with financial institutions in which the operator agrees to provide a steady stream of electricity to the counterparty. In return, the financial institution, often a Wall Street bank, generally agrees to pay a set price for the electricity. If the operator can’t deliver, it agrees to pay to purchase electricity on the wholesale market, or agrees to pay the bank to purchase power itself. Mariah has said it needs protection from Citi and the risk that the bank could seize the wind farm’s equity interests and force an asset sale to cover the nearly $100 million debt.
