Winter storm litigation about to get busy

Some test cases will be underway soon.

During the past year, the wrongful-death, personal injury and property damage lawsuits — nearly all consolidated before one judge in Houston — moved at a snail’s pace. Hardly any court hearings were conducted. No witnesses were deposed. Settlement discussions never took place.

The next two months, however, are pivotal to the survival of the lawsuits.

On orders of a judge, plaintiffs’ attorneys have spent recent weeks updating their cases, adding dozens of corporations as defendants and presenting new theories about why the power grid nearly collapsed in the brutal cold, leaving millions without power and contributing to the deaths of hundreds.

Key defendants in most of the earliest lawsuits were the Electric Reliability Council of Texas, which manages the state’s electricity grid, and large generators and transmission companies such as CenterPoint Energy, TXU Energy, Reliant and NRG Energy.

Now the suits have added the power providers’ parent companies, subsidiaries and business partners, such as power producers and retailers such as Vistra, Duke Energy, NextEra and Talen Energy.

Judge Sylvia Matthews has given attorneys until Feb. 28 to choose five individual suits from the 174 brought by more than 400 plaintiffs to be so-called test cases.

“By all accounts, this is a judge who wants these cases to move forward and doesn’t allow grass to grow under her feet,” said Mikal Watts, a Houston lawyer who represents 65 people in the cases.


Not all the legal disputes are part of the multidistrict litigation.

For example, nearly all the energy companies named in the wrongful-death, personal injury and property lawsuits also are battling each other and ERCOT over issues such as wholesale power pricing that reached $9,000 per kilowatt-hour.

“Lawyers on both sides agree that the financial ramifications of Winter Storm Uri caused the biggest transfer of wealth in Texas history,” said Houston lawyer Derek Potts, who is involved in several of the pending lawsuits. “The question is, ‘Was it legal?’”

“Actual discovery has not even started, and that is when we will pinpoint what links in the chain are to be held responsible,” he added. “The pipeline companies, for example, reaped a tremendous windfall from Winter Storm Uri and the outrageous prices. Is that legal?”

See here for some background on the cases before Judge Matthews and our new best friend, the Texas Multidistrict Litigation Panel, for which I still want someone to write me a long background story. I’m very interested both in those five initial test cases and in the fight over the ridiculous price level that power was allowed to reach last year. I’d sure like for the answer to those questions posed to be “No”, but I have no idea what it would mean if a court were to make that decision. Not that I wouldn’t want to find out, just that it would be more chaotic than if the Legislature took action. But chaos may be the only way forward, so here we are. Original story is from Texas Lawbook, but it’s behind a paywall. The above is taken from the Chron excerpt.

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One Response to Winter storm litigation about to get busy

  1. policywonqueria says:

    Re: “the ridiculous price level that power was allowed to reach last year”

    The cap existed by “virtue” of PUC/ERCOT rule. That means that the wholesale price could reach that level during peak demand and shortage of supply pursuant to market dynamics, but that condition would normally only occur for very short periods of excessive strain, such as a hot summer afternoon with air conditioners running at full blast.

    But in the Feb 2021 winter storm crisis, the PUC actually *ordered* the price fixed at the $9,000 per MWh level and even, in the initial order, made the market-wide price fixing (within the ERCOT region, which is most of Texas) retroactive, though they rescinded that part of the market intervention action the next day. Then, they kept the wholesale price fixed at the extremely high level even when the level III emergency alert condition had ended, and the market-generated wholesale price would have been back to normal because plenty of spare capacity was available to be tapped.


    From the Second PUC Order:

    “ERCOT has informed the Commission that energy prices across the system are clearing at less than $9,000, which is the current system-wide offer cap pursuant to 16 TAC § 25.505(g)(6)(B). At various times today, energy prices across the system have been as low as approximately $1,200. The Commission believes this outcome is inconsistent with the fundamental design of the ERCOT market. Energy prices should reflect scarcity of the supply. If customer load is being shed, scarcity is at its maximum, and the market price for the energy needed to serve that load should also be at its highest.”

    So, millions of consumers were offlined (loadshedded) without even so much as a warning, which reduced the overall strain on the system (ie, ameliorated the supply/demand imbalance) and therefore brought the wholesale price down, but Texas consumers were not allowed to benefit from the forced demand reduction on the consumption side because the PUC decided to keep the price at the max by fiat.

    Abbott’s appointees on the PUC opined that it was bonanza time for the industry, requiring that ERCOT and market participants charge and pay $9,000 per MWh (compared to an average rate of $35 or so) to those customers that were still receiving power, and also allowed companies to forgo service and get paid for nonuse while human-needs customers were shivering in their homes and got no compensation for helping to avert a total grid collapse through their involuntary sacrifice (i.e., not putting strain on the system by using power to stay warm, and keep the lights and everything else electric on).

    In short, this was a gigantic ripoff sponsored by the GOP-controlled State of Texas. Once the PUC assured the maxed-out price for electricity, the gas sellers got the signal that they could raise their prices to astronomical levels.

    The King and his minions can do no wrong, apparently

    And the PUC has sovereign immunity as a state agency. Whether ERCOT does apparently remains an open question, though a recent ruling by the San Antonio Court of Appeals doesn’t look good, though it’s not the last word. See ERCOT and Bill Magnus v. CPS Energy, No. 04-21-00242-CV (Tex.App.-San Antonio, Dec 13, 2021, pet. [in SCOTX] filed Jan 27, 2022).

    The state supreme court last year punted on the immunity issue in ERCOT v. Panda, 619 S.W.3d 628 (Tex. March 19, 2021).

    “We granted review and consolidated the two causes because these issues—which include whether the Texas Public Utility Commission has exclusive jurisdiction over Panda’s claims and whether sovereign immunity applies to ERCOT and protects it from Panda’s suit—are important to the parties and to our state’s jurisprudence. But after the court of appeals rendered its decision, and before the parties asked us to review that decision, the trial court entered a final judgment in the underlying suit, and that judgment is now the subject of a separate appeal pending in the court of appeals. Because the trial court’s interlocutory order merged into the final judgment and no longer exists, we cannot grant the relief the parties seek. As a result, any decision we might render would constitute an impermissible advisory opinion, and these consolidated causes are moot. However much we may desire to provide answers in these now-moot interlocutory proceedings, the constitution prohibits us from doing so, and we must respect that prohibition. We must therefore dismiss both the petition for writ of mandamus and the petition for review for want of jurisdiction.”

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