TXU court clash over Enron deals

THE administrator of Enron's failed London-based operations is set for a High Court clash with energy group TXU over gas supply contracts allegedly worth more than £1bn.

PricewaterhouseCoopers has asked the court to decide whether the two contracts expired when Enron collapsed last November, as claimed by TXU, or are valid until their expiry dates of 2014 and 2018, as PwC argues.

The case, which is crucial to Enron's hopes of recovering any money from TXU, is complicated by claims that an Enron representative told TXU on 29 November, just hours before the administrator was appointed, that TXU had breached the terms of the contracts.

The administrator could therefore claim TXU has to pay Enron the full remaining value of the contract. It is understood the contracts were 'backloaded', meaning they would be most profitable in their later years, leading the administrator to calculate a remaining value of up to £1.2bn.

However, TXU is expected to argue that even if the agreements were breached, the contract would have expired automatically when Enron was placed in administration hours later. 'They have no credible claim against us,' a TXU spokesman said.

TXU has said it has taken a $22m (£15m) write-off in relation to its Enron liabilities.