Aug. 5--BROWNSVILLE Â-- A CPL Retail Energy sales representative took the witness stand Tuesday in the first day of the trial of a lawsuit over a canceled city of Harlingen electric power contract.

Evidence and testimony on a 2007 contract extension of a 2006 contract with Hino Electric Holding Co., doing business as Hino Electric Power Co., is being presented to a jury in 357th state District Court before Visiting Judge Richard Terrell of Alice.

Hino Electric claims in the lawsuit, originally filed in 2006, that Harlingen city commissioners agreed to extend their contract to buy power for city buildings and facilities from Jan. 1, 2007, through September 2007, but on Sept. 27, 2006, city officials canceled the Harlingen contract effective Sept. 30, 2006.

In his opening statement, Ray Marchan, attorney for Hino Electric, told the jury that company Chief Executive Officer Alex Hinojosa Jr. had locked in a purchase price with a supplier as soon as Harlingen made an agreement to purchase the power from his company, giving the city a "blend and extend" agreement that split the cost savings for the extended period with the city.

Hino Electric is only seeking to be compensated for the amount of money it lost when the city canceled its contract, not for mental anguish or any other special damages, Marchan told the jury.

But the city was then offered a lower price by competitors Constellation Energy Services Inc. and Central Power & Light Co., whose officials knew a valid contract with Hino Electric already existed, Marchan said.

Gloria Cordova, a sales representative for CPL, who earlier had done the same type of work for Hino Electric, testified she made a "cold call" on the city of Harlingen in the fall of 2006 to sell electricity to the city that year.

All her dealings were with former city attorney Brendan Hall, Cordova said.

Cordova said she did not have a copy of the city's contract with Hino Electric and assumed the city would have informed her if there were a contract with another supplier.

Marchan likened the alleged actions of Constellation and CPL to "slamming," an illegal practice sometimes seen in the telephone industry in which a competitor takes over service to a customer already in a contract with a service provider.

"It's wrong to be slamming customers," Marchan said. "You're not supposed to assume they are free to negotiate."

Cordova replied: "I always ask the customer when their contract is over."

Hino Electric suffered $527,000 in losses, rather than making a $240,000 profit from its contract with the city of Harlingen, Marchan said.

But Mitchell Chaney, attorney for Constellation Energy, told the jury that Texas deregulated the electric industry in 2002.

"Competition is good for the consumer," he said.

Hinojosa had signed the contract presented to him by Hall and did not read it, Chaney said in his opening statement.

Hall had inserted an escape clause in the contract that allows the city to cancel the contract early, but Hinojosa entered into an agreement to buy the power from a supplier for that period anyway, Chaney told the jury.

When the city notified Hino Electric it was using its escape clause option, the company filed the lawsuit, he said.

The judge has "severed" the city from the case, which means it has no direct involvement, but issues involving the city's actions could come up in a separate court proceeding, Chaney said during a break in the trial.

However, Hall, who recently retired as city attorney, has been called as a witness for this trial by Marchan, Chaney said.

The trial will continue today.

-----

To see more of the Valley Morning Star, or to subscribe to the newspaper, go to http://www.valleystar.com.

Copyright (c) 2009, Valley Morning Star, Harlingen, Texas

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

A service of YellowBrix, Inc.