Texas Supreme Court Justices Hear Case That Will Decide if ERCOT Will Remain Immune from Storm-Related Lawsuits
HOUSTON, TX - A news article on houstonchronicle.com reports that Texans who suffered property damage or tragically lost loved ones during the 2021 Texas winter storm have begun to filing lawsuits against the Electric Reliability Council of Texas (ERCOT) to hold the electrical grid operator accountable for failing to maintain power for several days as outdoor temperatures fell below freezing.
ERCOT is a private, nonprofit corporation that is overseen by the Public Utility Commission and the Texas legislature. ERCOT currently has sovereign immunity that protects the governmental agency from lawsuits. However, the lawsuits filed against ERCOT assert that the company engaged in willful misconduct and gross negligence, which could pierce its sovereign immunity.
The Texas Supreme Court is currently hearing a case, and the outcome of that case will determine the fate of future lawsuits against ERCOT. The Texas Supreme Court Justices will rule on a case between Dallas-based utility company Panda Power and ERCOT. The case might remove ERCOT's sovereign immunity, which would open the door to new civil lawsuits against ERCOT. In other words, the Texas Supreme Court's ruling, in this case, could permit Texans to file lawsuits against ERCOT to recover damages for power outages that killed at least 48 people, injured hundreds, cost billions of dollars’ worth of property damage and business interruption losses.
A University of Houston political science professor, Brandon Rottinghaus, stated that a ruling against ERCOT, in this case, is a long shot due to a 2018 Dallas appeals court ruling in favor of preserving ERCOT's sovereign immunity. However, the professor believes the amount of political pressure on the justices may persuade the Justices to hold ERCOT responsible for the power outage that produced devastating and deadly outcomes.
The Texas Supreme Court Justices understand the importance of their ruling and that a broad ruling could open up ERCOT to a massive wave of lawsuits that could end up destabilizing Texas' electricity markets. However, the justices also understand that if they let ERCOT off the hook, angry citizens could become angry voters, and their re-election could be at stake.
ERCOT argued that the company needs sovereign immunity from lawsuits since the organization is funded by transaction fees paid by power retailers and generators. ERCOT stated that a large damage verdict would mean passing the costs to consumers through increased electricity prices.
Power Loss Lawsuits in the Waiting
The rolling blackouts caused a dangerous trickle-down effect, causing food to spoil, water systems to fail, home damage, water pipe damage, business to shut down and sustain billions of dollars in losses. As of February 22, 2021, more than 48 fatalities in Texas have been linked to ERCOT power outages. These deaths were caused by hypothermia due to prolonged exposure to freezing temperatures, carbon monoxide poisoning, and loss of essential medical devices. Millions of people in Texas have suffered, and they are looking for justice.