MidAmerican Energy Holdings, an Iowa-based IPP that recently completed its merger with CalEnergy, has been awarded over $572 million by an international arbitration panel sitting in Jakarta. The Indonesian state-owned company PT Perusahaan Listrik Negara (PLN) was ordered to make the payment to two subsidiaries of MidAmerican as a result of disputed power purchase agreements.

PLN had called for renegotiation of power purchase agreements with a number of IPPs following the collapse of the rupiah in the Asian currency crisis. With its rupiah-based revenue, US dollar denominated take-or-pay contracts placed an intolerable burden on PLN, and the company called on IPPs to voluntarily renegotiate the contracts, as widespread civil unrest prevented the company increasing revenue through tariff hikes. Failure to renegotiate, the company warned, would result in unilateral cancellation of the power purchase agreements.

The move prompted apoplexy among foreign investors with interests in Indonesia, and a number called for the dispute to be settled through international arbitration. In the first such case to be determined, the two MidAmerican subsidiaries, Himpurna California Energy and Patuha Power Ltd have been awarded $391.7 million and $180.5 million respectively.