Both cases will come up during the fall, and court watchers suggest they may receive simultaneous consideration given that similar questions are raised in each.
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The Supreme Court of Texas has agreed to consider two multi-million-dollar legal appeals that separately raise questions about whether the state’s principle power grid operator enjoys legal immunity. Both court cases will come up during the fall, and court watchers suggest they may receive simultaneous consideration given that they raise similar questions.
In the first case, Dallas-based Panda Power claims that the Electric Reliability Council of Texas knowingly produced false market data in 2011 and 2012. As a result, Panda invested $2.2 billion to build three new power plants and those plants ended up falling well short of revenue expectations. Panda now claims that ERCOT committed fraud and negligent misrepresentation by releasing the incorrect market data.
The second case pits San Antonio’s municipal utility CPS Energy against ERCOT and is directly tied to the state’s devastating 2021 winter storm. CPS alleges in its lawsuit that the grid operator inappropriately kept wholesale power prices frozen at a $9,000-per-megawatt hour cap after the worst of the 2021 winter storm was over. That action contributing to billions of dollars in statewide energy overcharges, including overcharges to CPS.
In both cases, ERCOT argues that it enjoys immunity against legal actions relating to its official actions because the organization claims it acts as a division of state government.
Different Trajectories
The cases have come to the Texas Supreme Court via different trajectories. In the first case, the Dallas Court of Appeals directly rejected ERCOT’s claim of legal immunity, and this led ERCOT to go to the Supreme Court to have the lower court ruling reversed. In the second case, the San Antonio Court of Appeals dismissed the CPS lawsuit, stating that the utility instead should have taken its claims through an administrative process at the Public Utility Commission. CPS then appealed to the Texas Supreme Court.
ERCOT was hit with hundreds of personal injury, wrongful death and property damage lawsuits after the 2021 winter storm. The Texas Supreme Court’s decisions in the Panda and CPS cases could bear on the outcomes of these other cases, which, combined, could cost the grid operator billions of dollars.