Contract Disputes

Claiming over $1 billion in damages, an independent power producer filed a breach of contract suit over the construction of a major power plant. Working on behalf of the defendant, Cornerstone Research evaluated the damages claims submitted by the plaintiff's experts. We supported the defense experts' testimony about factors that affected the damages calculation, including projected electricity prices, the potential for fuel purchase agreement renegotiation, fuel transportation costs, displacement provisions in the purchase power agreement, and the appropriate discount rate. The final arbitration award for damages was a small fraction of the amount originally claimed by the plaintiff.

Price Fixing

When a state filed a lawsuit against several major oil companies for allegedly colluding to fix the price of gasoline, counsel for one of the oil companies retained Cornerstone Research to analyze the operations of the gasoline market in the state and to assess the collusion claim. Our research showed that our client's decisions on pricing, capacity, purchasing, importing, and capital investment contradicted the plaintiff's claims of collusion. A settlement favorable to the oil companies—a local newspaper reported it was one percent of what the state had sought—was reached.

Mergers and Acquisitions

In its assessment of a proposed merger of major oil companies, the Federal Trade Commission raised a number of competition issues for further review. Cornerstone Research supported an antitrust expert who was retained as a consultant on many of these issues. Following extensive FTC scrutiny, the merger was permitted.

Market Manipulation

A variety of market participants in the natural gas and electricity markets have retained Cornerstone Research to evaluate allegations of attempted market manipulation. Drawing on the experience and market perspective developed in these engagements, Cornerstone Research sponsored a day-long conference that provided a discussion of widely disputed issues of market manipulation in the energy markets. The conference, attended by market participants, their counsel, federal regulators, and academics, promoted a vigorous interchange of ideas among parties on all sides of the market manipulation investigations.

Regulatory Proceedings

Cornerstone Research was retained by parties active in California energy proceedings to collect and consolidate data on California electricity markets, analyze bidding behavior, and suggest appropriate methodologies for calculating FERC-ordered refunds.

Strategy Consulting

Cornerstone Research was retained by the compliance unit of an auction market in a deregulated electricity market to develop analytical tools and procedures for monitoring bidding dynamics in its daily auctions. A Cornerstone Research team developed reporting and monitoring tools to enable the auction market's staff to assess the large amounts of market data generated daily in the electricity markets.

Bidding Strategy

A major oil exploration and production company retained Cornerstone Research to examine the company's bidding strategy in auctions of deep-water offshore oil leases. Working with an economics expert, Cornerstone Research staff examined bidding outcomes in the auctions of deep-water leases and developed analytical software to quantify the risk of overpayment by the highest bidder, a practice known as the "winner's curse."