Hydro sued for pounds 25m

The Scottish electricity company, Hydro-Electric, is being sued for pounds 25m by a small specialist energy consultancy which alleges that it reneged on a joint venture deal and poached a key member of staff.

A writ was served by Sterling Energy Equities UK on Hydro-Electric last month and the Court of Session in Edinburgh has given the plaintiffs leave to proceed with the claim.

The case centres around a five-year agreement that Hydro-Electric and Sterling entered into in 1994 to provide energy management and generation systems for industrial sites.

One of the projects the joint venture was working on was a pounds 200m development of a 500-acre site in Mossend, Lanarkshire, including the installation of co-generation equipment.

Last October, however, the agreement was terminated. Sterling alleges that Hydro- Electric also "enticed away" one of its project team, Martin Thomas, a computer specialist.

Sterling claims in its writ that the anticipated return from the Lanarkshire development would have been pounds 100m over the next 20 years. The company, which had a 20 per cent stake in the joint venture with Hydro, is claiming pounds 25.5m in damages plus interest. Most of the claim relates to revenues it says it will forgo but some is understood to relate to Mr Thomas's services.

A spokesman for Sterling said: "We did have a relationship with Hydro that ended acrimoniously and it is now the subject of litigation." The company, he added, had been advised by its Edinburgh solicitors, Simpson and Marwick, not to comment any further.

A spokesman for Hydro-Electric said: "We intend to defend this action vigorously."