of what the market price might be the central question on appeal here is whether duke can escape that all occasion by deliberately preventing benton from generating power when because the market price is to love to do not want to accept pay for that morning what i'd like to do is try to do three things first very briefly explain why duke's conduct here is a violation of the contract and subverts the entire purpose of fixed price contract in fact duke has never offered any explanation as to how its interpretation makes any commercial or sense or why any rational party would agree to that type of contract second what i'd like to do is address dupes to main arguments that the current rule need to address the question why any rational party would agree to what you say you agreed to do which was to pay an infinite amount of money right as much as me so would conceivably except for your client's benefit well honor i don't think that really is our position so let me break that down in two ways one is the the the importance of the liquidated damages provision in the contract and second how the market actually works so let me start with the liquidated damages provision what the contract says no i can understand your argument that this is effectively a take or pay contract and they have to pay what they take or not the reason i asked this question is because your alternative argument is that had to pay me so any amount no matter how hot to make sure that me show would actually accept the power that your client was generating so you're on it let me address that because both points get to that point so but let me to maybe be helpful for me to start with the way that that process works is what we are saying is that if they don't choose to pay liquidated damages and that's important if they don't choose to pay liquidated damages what they need to tell me so is from our perspective that they are willing to pay whatever the market price might be that does not mean that they have to pay the maximum you know well but the reason i say say including internet is that if i understand what's going on correctly me so has concluded that he doesn't have enough transmission capacity in central indiana to take all the power that being generated by by wind farms so it has to curtail and that is an absolute limit on what it can take and therefore it might be that the negative approach to inject energy into the grid could be infinite it will be as high as necessary to make sure that the grid doesn't overload that is right your honor but the point of the fixed price contract is that whatever you bid is sets what what ends up happening is the parties that and it takes the highest bit of whatever amount clear so they they take as much energy as they can and then the highs but that clears and what we're saying is that by a green under the contract to pay whatever the market price would be that duke was essentially in a position it didn't matter whether the market price was low or not now you're on or let me is your client the only wind farm with which anyone has a similar contract if the problem is that there's too much wind energy being generated for the size of the transmission capacity you know you can't have every win for making the same claim because then it's a claim that there is an absolute right to inject into the grid more power than the grid can handle with respect no that's not right roger and and let me explain why that is because obviously it's not just wind farms that are putting energy onto the grid the point is is that it isn't a question of how much energy are right to inject energy on the one foot in fact we don't even care what duke does with the power we don't mind whether duke doesn't actually have to sell it so my so do could keep it itself pay for transmission service and use it to serve its customers it could also under the contract the problem about congestion on the contract has to do in part because there isn't sufficient transmission service but the contract in six point four is very clear that duke has the obligation to secure transmission status but your own if i could i do want to emphasize the liquidated damages point because it's it explains how these contracts work which is that you negotiate a liquidity stated damages here liquidated damages equals the contract price plus the credits and every rational bit or whether it would be a wind farm just bidding on itself or whether it would have been duke who is now in the position of the wind farm the negative bid that you would bid up to is the value of the tax credits and after that point you would never pay for more because the only rational better would be the difference of the well so in answer to your second question your honor we've already on our own initiative made investments to upgrade the grid but it's not clear how that will play out but with respect are honored in the sense that i just don't know how the the capacitor got to go back to a case  was argued in this court last march do you have a right of first refusal to add the transmission capacity your honor i i i'm aware of those cases but i would dare go into the murkiness that you are but let me say though your honor that with respect that isn't a change that happened on the contract the parties knew very well and the reason you have a fixed price contract is that the parties recognized that congestion could be a problem they wouldn't do solicited this contract it knew very well that one  do was hedge against environmental risk and it wanted to hedge against high prices now it could be that we know how energy markets have changed so significantly over the last couple years all duke is doing right now is saying we don't want to take the downside of the contract but if the prices go up it is quite willing to take all the upside and the whole point of a fixed price contract in and your owner's decision and in the nips co case i think makes this point very well is that regardless of what happens in terms of either the market or in terms of what happens in terms of government regulation the parties in a fixed price contract are allocating risk and the risk for our benefit was that we would get the reliable stream of income so that we would be able to get the investment that we needed which is why we responded to do solicitation on duke's side it got the upsides of hedging against environmental risk it got the upsides of experience of dealing with a wind farm and it got the upsides of any market prices that went through the roof now your honor if i could go back to my sort of first point if you take a look at the contract it's very clear that we're paul could you give me a possible so in the in the contract itself the first provisions that we focus on are four point one four point six which says that they third provision that says whatever the force majeure events that the parties have agreed to the one thing that cannot be a force majeure event is a change in economic circumstances that change the market price but if you look at what duke has done it is violated the letter and spirit of all of those provisions it has not accepted the energy that we are willing and prepared to deliver and the only reason we can't do that is because of dupes conduct it is done that by taking advantage of a change in market rules to curtail us so that we can't generate the power that we are ready and willing to generate and it has done it precisely because there has been a change in market circumstances that mean that the market prices it doesn't want to pay for the low sides anymore but all of that is completely in violation of the essence of what the contract is about and you know judge you so what do you mean when you say doesn't want to pay them what we mean liquidated well yes your honor i guess what the way i would put it to be precise is that our position is that they need to tell my so when they did into the market that regardless of what the market price might be that they are prepared to take our power at that price or they can pay liquidated damages and but i'm sort of generalizing the liquidated damages they say mr rice they are not your honor what the liquidated damages are is there the contract price plus the tax credits the contract place washes out so that the rational thing that you look at i s the tax credits that i'm not going to be exact on this but this hack's credits is about say like forty thirty five dollars the rational bit in this is what the wind farms do is they didn't minus thirty five because they know that if the price drops to anything less than minus thirty five they take the credits and so the reason why i was having my exchange with veggies to both is because this idea of the maximum negative price doesn't actually work in the sense that the contract actually minimize that risk by having the liquidated damages provision but what they're trying essentially to do here is change it so instead of saying the liquidated damages is that minus thirty five or thereabouts price they're changing it unilaterally by taking advantage of their ability to bid to say well we don't want to pay for prices that are that are negative like that we only pay for a higher price and the whole point of the the idea that they were going to take our generation no matter what happened was that even if prices debt for a time that would be on them not on us and what's happened is that they've shifted the risk so now we're being pushed to a point of insolvency because now that that right now the prices are low we're bearing all that risk even though the whole point of the contract was to even out  o my so is implicated in some way and you know you know we don't have a problem with my so your honor that the way we would put it is that and we use the example in our brief of somebody who who who builds a gate if if the the the buyer is a good across the road so you can't deliver potatoes to a buyer if if someone else is telling that person when to close the gate it's that person is responsible what's happening here is my so is doing predictably what it would do based on  duke has all the ability to tell my so when we can run by putting in a bid that will say to my so we will comply the contract no matter what the market prices we are taking this power what duke is doing is it's using money so in a way to interfere with our ability to perform the contract so one of the one of the key arguments in the case is whether or not we have to but when you say it's using my prevent use use the same problem wi your own i wouldn't think about that so the way i would think about it is that before the rule change all that happened was that we were designated as a must run facility which meant that no matter what was going on do we just take our power and and the market price would be what it is when my so changed the rules it allowed duke to say when it wants to take the power by putting in a bid and if that bid clears then they take the power and if it doesn't they don't so essentially using that new mechanism do could bid as high as it not ours but at the end of the day it's very predictable they may not know exactly what the market price will be and it may not always be the case that my so follows their instructions exactly because of ramping up and ramping down of the facility but they do know the relationship with perfect precision which is that they know that when they'd bid at a certain level if the market right price drops below that level that they will not have to pay for the power and the whole point of the contract was to say that they could not do that so they've basically exercised self help to take advantage of the change in the market rules to minimize their downside risk that's so we can actually speak to section six point two hundred reason and say a few things about that is that the first thing we'd say is that whatever reasonable miss requirement is included in the contract we know from basic contracting principles that preventing another party from performing is not itself reasonable but also you're if you take a look at section six point three which is the next section it goes on to say that nothing in section six point two shall let me see if i can read the exact language too big but essentially nothing in six point two full of the wind farm that is reinforced by the section two point four in the separate joint operating agreement which is very specific that says do cannot curtail and so what we would say is that however you interpret the reasonably good requirement it cannot be interpreted in a way that would prevent us from generating power and allowed you to avoid accepting power that we're prepared to deliver and one of the reasons that you're on is that when this contract was negotiated there wasn't the ability to b in the way that they can bid now and so it is true that things change and parties cannot always into separate how things will change but the essence of the contract doesn't have to change which is that the market risk will remain where and where it remains and was allocated on the contract that i take to be the courts the point of the court's decision in its niche scope case which is that yes it is true that regulations can change yes it is true that market conditions can change but the point of the fixed price contract is to have make those changes largely irrelevant and i think you know if i may going back to judge posner's question here about my so it is telling that stoops defense here of why they are doing this is because they think they're helping their customers out of course that in our mind just shows the fact that they recognize that there is this relationship and of course the contract was approved by the regulators on the understanding that prices could go down here as i see them  is good morning may it please the court duke energy is not shifting the burden to benton county and its you can or joe will not be an example of circumstances in which he would knowledge that you would be required to pay them with a one one example your honor would be a situation where duke energy did not obtain transmission services if you read the language of section four point six it talks about do it in the event they fail to accept power  failing to obtain transmission services there are series of defenses that you could use emergency condition force majeure that are not at play here today but what ben county continues to ignore is that there is only one exception where duke could fail to accept power and that would be by failing to obtain transmission services under six point four what benton is arguing and what they are suggesting is that under four point six the liquidated damages clause duke is obligated to guarantee delivery of every single megawatt that ben could possibly deliver and in under any plain reading a four point six liquidated damages clause you can't read it that way you have to look at failure to accept it you have to look at transmission services then you move over to section six point four and the very first sentence of that paragraph is dispositive of this issue back in two thousand and six when the party signed this contract told benton that they were did not intend to use transmission services number one number two that they intended to deliver the power that was purchased at the meter point and measured and deliver that to the grid or to my so t county are about five miles from the meter point the power travels to the meter point and then transmission services would be an example of where duke potentially although not required other or other utilities can move the power away from the meter point by additional transmission service additional lines here in this case the power moved directly to the grid and to my so at that meter point so there was no need to utilize transmission services and benton knew that from the beginning and agreed to that now ben has continued to focus on the language a little bit later in the paragraph where it says will do is required to obtain transmission services that is not true there is no evidence in the record that my so ever required to obtain transmission services in fact my so has has taken the power at the meter point so when you analyze transmission services  and you analyze section four point six this liquidated damage issue is this right for summary judgment which is what dr parker did one more point on transmission services ben's own expert testified that duke is going to accept the power at the meter point it does not need to change transmission services that spends only admission what it i don't know what our transmission is or their basic plan transmission lines there are there are the ability to move power to through the grid and so if you're driving down the road you'll have power lines those essentially are transmission services it's capacity it's the ability to move through what is at that meter in point it is a transmission line essentially where the power is measured and then goes out into the grid this power is in or the northwest indiana and moves out into illinois through the lines that you see on the road as a different train those transmission lines and what you're calling trans services it's essentially the same thing your honor and benton county wants do to pay hundreds of millions of dollars to create its own separate set of services and move the power elsewhere and it's not required to do that it's really it's required under the contract we're not talking about construction we're just talking about payment of liquidated damages but the payment of liquidated damages ducasse is not obligated to pay any of those liquidated damage because it hasn't failed to accept any power and the reason why it hasn't failed to accept power is because the only way it can fail to accept is if it doesn't obtain transmission services so for example let's say my so told duke we're not going to take the power at this point we want you to move it somewhere else and duke says we don't want to do that well then benton would not be able to deliver the power at that point because michael would let them that is a situation where bench and could come to do can say you will liquidated damages because you won't move the power elsewhere that is not our case there is no i don't see what the i don't understand that if for points what what is the point the point is well so if you think about the negotiation late look leading to the liquidated damages clause why would why would you be pushing for this exception why would because that the parties agreed to the contractual language is going to see the logic behind this what is the practical consideration that would lead to a different rule about liquidated damages depending on whether there's one kind of transmission line or another kind or another location of transmission line the logic behind the contract was that duke energy was going to purchase power delivered by denton county subjects subject to my sos dispatch and as long as my so is dispatching that power benton is able to deliver that power and everybody gets along fine where benton is complaining and what they're what they're upset about is they're arguing that we are not accepting all of the power that they could generate we're duke is not obligated to accept that power that they cannot generate unless so is this liquidated damages caused just just a following a no no it's not a no w always be able to get out of or no because no because if we did not obtain if my so told do you have to move the power away from this meter point and send it somewhere else and if i should have man or whether it's the  somewhere else because that's what the contractor but why because that's what the parties are wondering why there has to be a reason for any program doesn't that there doesn't the reason behind the agreement was that that would would generate power deliver it to this point where it has to be measured and then it would be delivered to the grid the point of the wind power was to deliver clean energy to the grid and this was the mechanism that the parties agreed to generate deliver measure goes out into the grid that's that was what the parties agreed to the parties also agreed that they would recently difference is that if it goes and if it if it goes to other transmission lines and still going to be going into the grid in a different place where i live well potentially potentially in it i could potentially you could avoid some congestion although there's nothing in the record that would suggest by moving the transmission services you could you could avoid you know it sounds like like there's nothing and i'm sure that the there is a reason why there is a lot is the reason the reason is to allow the parties to agree to a situation where duke would have to pay the liquidated damages but there's only one exception that the parties agreed to and that is duke's failure to obtain additional transmission services or to move the power elsewhere and model depended upon the delivery of all the power that it could possibly generate pension should've entered into a contract where duke is required to buy a minimum amount or pay a certain amount and that's not what this language quite this is a and exception involves transmission services and i just wish he had a reason for it well i do because that the reason is that where my so may require jupe to move the power elsewhere that's the reason in my so has never required that what my so does is it takes the power that duke sells to it and that's the system that's this electrical that's how this process was set up so there is an absolutely judgement reason why the liquidated damages provision is present in the record of what percentage that was dispatched prior to the rule change we do know that in two thousand and ten eleven and twelve my so was issuing significant curtailments by phone because of the congestion that the judge a book talked about the reason why the my so moved to the rule change was because the congestion was significant no i understand there's nothing wrong with reducing with adjustments by my so that res empty it's not empty it's just there's no facts that benton can present where they would be entitled to the liquidated damages it's it is a it is a very legitimate provision with with a a place and the reason is that if well that is the reason why you should you think that it's fine for you to have to pay liquidated damages if the energy goes into one anyone care about having the liquidated damages clause which would be worthless if there was some shift in you know where the energy was pick you're on a bench and is also argued that duke has not reasonably cooperated by submitting its offer price and they've they've attempted to take the reasonable cooperation language and argue that we are failing to guarantee delivery of power and so potentially although they haven't specifically argued that failure to accept equates reasonable cooperation i think one can assume that ben is saying you should be offering a maximum negative price to guarantee delivery and by not doing so you're failing to accept that is not the definition of failure to accept what duke is doing is submitting an offer price that takes into consideration of right even trysts including benton's own interest benson's expert testified to that that the contract price would be reasonable offer to my so if this is not a take or pay contract and it is clear that this is not a take or pay contract so when you look at the undisputed facts that the district court considered and you look at duke's actions it is much more reasonable than what even veterans own expert testified duke takes into consideration his customers fixing the consideration the i u r c order which requires that duke assume it'll pay the lowest reasonable to take into the price factors in congestion demand a variety of other issues and then it decides whether the power is dispatched at that price that his own expert admitted that he did the conception of the meaning of the term electrical or electrical output is defined as power that is delivered to the point of meter and that's what duke has been paying is the electrical output after the my so clears it offer price and my sil's offer price is part of the algorithm my suit has been dispatching fifty nine percent of the time and as a result duke is by definition reasonably cooperating by submitting the price that has been submitted it is not a guarantee for a seat at my at one minute it is not the guarantor of this project the parties agreed an arms links deal duke would purchase power delivered there is no dispute that they have done that and the idea that a my so dispatched down signal is a failure to accept cannot be read by the plain meaning of this contract duke is not hiding behind my so they are not attempting to use my suit to do anything other than sell power into the grid which is what it has done and the difficulty of predicting what offer is compound it by the fact that my so even at times  has dispatched this plant this wind farm down even when the price has been above zero benson wants to submit the maximum negative price but this contract says reasonably cooperate with each other and in order  three mean what it says nothing in section six point two of this section six point three so require seller assume that then take any action affecting or which would otherwise result in a reduction in  title of the section i believe is environmental quality certification requirements and it just it says simply that nothing in six point two shall require to take seller to take any action that would result in electrical output and certainly duke is balancing including benton's interests if duke was truly avoiding button's interest it would be offering the contract price to myself and it doesn't do that it is offering its reasonable price and as a result of my  not have a percentage of output falling we do know that it is currently dispatched fifty nine percent of the time there is no evidence in the record of up before or after so we have a fifty nine percent current number and one more point on that your honor is that when my so there are times when my so will dispatch the wind farm when the price is below duke's offer which means that duke ins up paying the negative costs to myself and duke has paid almost seven hundred thousand dollars in those negative costs which have been audited and which ducats to submit to the i u r c to obtain approval for those and so as a result my so is dispatching there are times when my suv doesn't dispatch but at the end of the day duke is reasonably cooperating it is not required to obtain transmission services and it has not failed to accept any power so as a points and then wrap up first we are not saying that duke must guarantee that we can generate what we are saying is that do cannot prevent us from generating your honour's in response to your questions in their bidding has reduced our production output by fifty percent that's a finding by the district court on s a twenty seven of the supplemental and second there is no logic behind their position at all they cannot distinguish the situation between when they exercise self help by bidding and saying we're not prepared put pay the market price from a situation where they come in and cut the lines but there's obviously the contract has to prevent situations where a party frustrates the other billet party side to perform their whole argument my friend's whole argument hands on this idea that there's a difference between generation and delivery but as a matter of physics that makes no sense the whole way that this works is that as soon as we generate because of the way that electrons move at the speed of light the energy goes on to the grid and so this idea that there is a separate obligation for us to deliver doesn't work and also you'll notice that nowhere in there briefing or in the argument today or in the district court that they pointed to anything that has prevented us from delivering the power to the point of meeting except the fact that we're getting a dispatch down single that is a direct predictable and obvious result of the fact that duke is telling my so that is no longer willing to take our power when prices are lower than it would like to pay they also have failed to obtain transmission service i don't think the court needs to get into this complexity but if you take a look at section six point four of the contract what it says is that they need to obtain transmission services necessary to accept the power at the point of metering including transmission service isn't necessary to deal with congestion just easterbrook this takes us back to your original question that although yes we have put money in because we want to vive we want to relieve the transmission the contract is clear that the party that has that obligation is due it isn't the duke who has to get transmission services we don't care what duke does under the contract but duke has to accept our power and it can't use its excuse of not taking transmission services as a reason for not being able to accept it so there's lots of things do could do under the contract to live up to it contractual obligations we don't care what they are whether it's taking transmission services whether it's designating us must run whether it's paying us liquidated damages or whether it's bidding at a significant low enough level that their bid will clear any one of those things are sufficient but they have to do it to comply yours let me just finish out by emphasizing looking at what the will of the contract makes sense if you interpret the contract the way we would like to interpret it it puts the parties on the same position they were when they negotiate contract we get nothing more or less than what we negotiated which is the contract price when we can generate power for reasons that have nothing to do with dukes of them as long as the wind blows we're generating our power duke is in no worse position all it done is taken on the market risk if prices go back up duke will be singing al ahluwalia it will be doing very well thank you very much and when to prices stay low than it takes that risk but that was the risk that was assigned if you interpret the contract the way duke wants you to it makes no sense at all because essentially other than their argument that they have to be reasonable there is no limit at all as to what market price they can force us to shut down which essentially means that the contract instead of being a fixed price contract it out shouldn't that have been the contract condition what you're on i guess i would say a few things one is that both the district court and duke are putting a lot of emphasis on that reason most language which is one provision of the contract does money up the contract if there is one and i don't think so your honor because i think it is true that both parties have to cooperate and act reasonably at the time we negotiated the contract that reasonable bid requirement had a very different meaning because there wasn't the ability for due to bid so in some ways it was fo  our as much for benton's benefit as it was for theirs it's only because of the changed circumstances and the one thing the courts always do is they recognize that whether you're interpreting the statute or whether interpreting a contract it is always possible in retrospect to come up with some clever argument as to why it can be circumvented but we have these background principles that say no you can't circumvent the contract it is odd to put all this emphasis on reasonable bidding where six point three specifically says that that cannot be a basis for curtailing and then you undermine the rest of the for a wind farm and our the risk we took was to operate the wind farm make sure that you know if lightning strikes that's on us their job is to buy the the power no matter what the price would be your honour's i appreciate time let me just ask you that you reversed the district court