Barcelona Court Orders Aura Energía to Pay €3 Million in Damages to Tenerife Water Council

The Provincial Court of Barcelona has ruled that the Tenerife Island Water Council (CIATF) is entitled to nearly three million euros in compensation following a legal battle over a broken electricity contract. The dispute arose after the supplier, Aura Energía, unilaterally ended its agreement with the council.

The court’s decision confirms that the council’s claim will be split into two parts: 1.4 million euros as a "general privilege" claim and another 1.4 million euros as an "ordinary" claim. This ruling rejects Aura Energía’s attempt to justify abandoning the service by blaming rising wholesale energy costs. The court dismissed this argument, finding no evidence that the market conditions excused the company from its duties, and labeled the contract breach as "culpable."

The conflict began in late 2021. Aura Energía, which had signed a two-year supply contract in 2019, suddenly announced it could no longer provide the service. Despite initially suggesting it would extend the agreement, the company transferred the service to a third party without the council's permission. Consequently, the CIATF terminated the contract in July 2022 and sought 2.9 million euros in damages.

This case underscores the challenges of managing public supply contracts during periods of high price volatility. Under current regulations, if a contractor is at fault for a contract termination, the public administration is entitled to compensation for damages that exceed the initial security deposit. Despite some earlier procedural errors regarding communication deadlines, the Provincial Court has upheld the council's right to claim these funds, placing the CIATF among the creditors in Aura Energía’s insolvency proceedings.