Texas Supreme Court to decide if ERCOT should be protected from lawsuits sparked by deadly winter storm

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Lawyers argued in the Texas Supreme Court on Monday over whether the state’s power grid operator should be protected from lawsuitsa question that became especially relevant after deadly frosts in February 2021.

Individuals and insurance companies have filed lawsuits against the Texas Power Reliability Board and power producers in the aftermath of the hurricane, which left millions of Texans without power due to freezing temperatures and hundreds of people died after power outages across large parts of the state. How are these things going? will depend on what the Supreme Court decides in the coming weeks or months.

Lawyers for ERCOT, the non-profit organization that runs the government network, said on Monday that it should receive the same “sovereign immunity” that largely protects government agencies from civil lawsuits.

Since ERCOT is authorized by the state to perform public functions and is overseen by a state agency—the Texas Public Utilities Commission—ERCOT should not be held liable, they argued, stating that legal action against ERCOT should instead be the responsibility of the PUC. .

ERCOT “does not perform any functions other than those assigned by the state,” lawyer Wallace Jefferson said. “He has no autonomy from the state. … He has no personal interest. His interest lies in increasing public interest in a reliable network. The state controls its charter. And the state sets a fee that finances the organization.”

The counterargument of lawyers in two separate cases was that granting such immunity to ERCOT was inappropriate.

Attorneys for Panda Power Funds, a Dallas-based private equity firm that develops and operates power facilities, and CPS Energy, a San Antonio power company, argued that just because ERCOT is regulated by a government agency does not make it part of the Texas government.

CPS Energy attorney Harriet O’Neill said the State Legislature has the right to make ERCOT explicitly part of the government, “but despite many opportunities, including after the winter storm, the Legislature has never given ERCOT the status of government, and it knows how to do it. do.”

Judge of the Supreme Court Jeff Boyd offered an analogy to explain the lawyers’ argument: imagine that the state legislature decided that all yellow lanes on the roads should be painted red. If the Texas Department of Transportation did this job and was accused of doing it wrong, it would be protected from lawsuits.

But if instead the legislature tells TxDOT to authorize another organization to do the work, and TxDOT sets prices and dictates how to paint the stripes, would the contractor be considered a government agency?

After the 2021 winter storm, state legislators finalization of the ERCOT board, changing it to an 11-member group consisting of eight state representatives, plus the ERCOT CEO, PUC Chairman, and PUC Attorney. Previously, the board consisted of members chosen by various means, including by the ERCOT Nominating Committee or by companies and consumers.

On Monday, lawyers debated whether it matters: ERCOT lawyers argued the changes show lawmakers intended to make ERCOT part of the state government; Lawyers for the opposing side said the changes were irrelevant as they came after a winter storm that sparked a slew of lawsuits.

Lawyers for numerous lawsuits filed by family members and insurers in Harris County District Court will be closely monitoring the Supreme Court’s decision.

“Insurance companies demand compensation; families are demanding compensation,” said Ann Soser, one of the plaintiffs’ representatives in these lawsuits. “If we want to see a functioning power grid in the state of Texas, then I respect that, I think we need to have some accountability.”

The culmination of nearly two hours of argument was when Jefferson, an attorney for ERCOT, stated in his closing remarks that the grid and its overseers exist to protect Texans and Texan trade and need to be protected.

“Does it boil down to you saying that ERCOT is too big to fail?” Boyd asked.

“Without a stable network, nothing can happen,” Jefferson said.

– Means yes? Boyd asks.

“Yes,” Jefferson said. “Yes it is.”

Disclosure: CPS Energy provides financial support to The Texas Tribune, a non-profit, non-partisan news organization funded in part by donations from members, foundations and corporate sponsors. Financial sponsors play no role in Tribune journalism. Find the complete list them here.

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