The troubles facing Europe's power industry have been highlighted once again following news from US energy giant TXU that it will take a $4.2bn (�2.7bn) hit for its struggling European business.

TXU lodged its decision with the US Securities and Exchange Commission on Wednesday.

It included $3.6bn (�2.3bn) write-off for the company's investment in Europe.

We will vigorously defend ourselves to provide stability in the UK electricity market and protect value for all our creditors

TXU

Meanwhile in the UK, one of the largest utility groups, Innogy, has asked the High Court to close TXU's European energy trading division.

TXU said it would defend itself against the order.

Bad to worse

Last month, TXU Europe agreed to sell its UK retail and generation arm to Powergen, owned by the German group Eon.

It also said it expected to write off between $3bn and $4.5bn (�1.9bn-�2.9bn) for its European division which it effectively put up for sale by withdrawing a $700m (�449m) lifeline.

The division has suffered from the slump in electricity prices, which have fallen by 40% in the UK since the government opened up the wholesale market last year.

Innogy's petition could now lead to its European division being put into administration.

Defence talk

Last month, TXU reported a 38% fall in profits for the three months to September, largely due to its troubled European operation.

But TXU Europe, based in Ipswich, said it would defend itself against Innogy's petition.

"If a winding up order is served, we will vigorously defend ourselves to provide stability in the UK electricity market and protect value for all our creditors."

Innogy is one of TXU's smaller creditors, and is owed less than �20m.