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Freeze-related lawsuit filed against CenterPoint

Of interest.

Several more Houston families of victims of the February freeze are among the latest to sue CenterPoint Energy for allowing vulnerable people to languish without power during what were supposed to be brief blackouts.

Travis Flowers, 66, and Qazi Momin, 83, relied on oxygen tanks to survive, according to separate lawsuits — both of which were filed Friday by lawyer Tony Buzbee.

In the case of Flowers, the power at the Army veteran’s Houston home went out Feb. 15 and his wife, Brenda Flowers, swapped out his powerless tank for a portable device. By then, the home was too cold for the backup tank to work, according to the lawsuit. Flowers’ oxygen levels dropped dangerously low and he died at a hospital.

Two days later, when the power went out at another residence, Momin’s caretaker found him breathing rapidly. His oxygen tank was without power, the suit states. She “tried to make him comfortable using pillows to support him” but hours later, he stopped breathing.

Her phone was dead “so she went to her car to charge it so that she could call for help.”

Details surrounding Flowers’ and Momin’s deaths could not be found in medical examiner records.

The wrongful death litigation, among several filed after the winter storm that knocked out power for millions of Texans, both accuse CenterPoint — a private utilities company — of negligence for cutting power to Flowers’ and Momin’s homes as the temperature lingered below freezing.

[…]

Although CenterPoint was acting on instructions from the Electric Reliability Council of Texas to lighten the power load, the regional energy company, Buzbee contends, was able to choose which circuits to sever power to and for how long. ERCOT, who is named in this case but not a defendant, manages most of Texas’ electrical grid through a deregulated market.

The lawsuit claims the energy company failed to disclose the possibility of a failing power grid or prepare Houstonians to keep warm or leave the area. The nine-page document points to a tweet that CenterPoint officials wrote the morning of Flowers’ death that states “controlled, rotating electric outages” would begin but that they would be temporary.

“At (the) same time that CenterPoint and others were telling the public that the blackouts were temporary and rolling, public officials were urging people to stay home and off the roads,” the suit reads.

Transparency and “balanced rotations of power” in Houston neighborhoods, Buzbee argues, could have saved their lives.

There have been other freeze-related lawsuits filed, against the now-bankrupt Griddy and against Entergy, with the latter also from the busy office of Tony Buzbee. There’s also litigation against ERCOT, though it remains an open question as to whether or not ERCOT can be sued in this fashion. I don’t have any particular insight about this action other than to say that however much you might think CenterPoint is at fault, the greater responsibility in my opinion lies with the Legislature and the state’s regulatory structure. None of that can really be sued (except maybe ERCOT), so here we are.

On a related note:

Last month’s disastrous and deadly winter storm impacted most Texans served by the state’s main power grid, with almost 70% of those people losing power in subfreezing temperatures and almost half experiencing a water outage, according to a new report from the University of Houston.

And although Texans were told to prepare for short-term, rolling power outages ahead of the storm, those who lost electricity ended up going an average of 42 hours without it, the survey found.

As the updated death toll from the storm reached 111 deaths last week, the severity of its full force has continued to come into focus. The damage the storm wrecked could make it the costliest disaster in Texas history.

That report is here. I figure we were without power for about 50 hours at our house – about half of Monday, all of Tuesday, and about half of Wednesday. Doesn’t have any direct bearing on the litigation around this, but it’s another reminder of just how bad this was, if for some reason we needed one.

SCoTX punts on ERCOT lawsuit question

Wimpy.

The Texas Supreme Court punted Friday on a question dogging millions of Texans affected by last month’s catastrophic power failure: Can ERCOT, the state’s grid manager, be sued?

The state’s highest court ruled 5-4 that it won’t decide — at least not now — on closely-watched case between Dallas electricity generator Panda Power and the Electric Reliability Council of Texas. The $2.2 billion case filed by Panda Power in 2016 raised the question whether ERCOT is a governmental agency that has sovereign immunity protecting them from lawsuits. ERCOT, a private, nonprofit corporation overseen by the Texas Legislature and the Public Utility Commission, is the only grid manager in the country that has received such protection.

Five justices led by Justice Jeff Boyd said the Texas Constitution prohibits them from ruling on the case after the trial court issued a final judgment dismissing the case. Based on a finding of sovereign immunity by an appeals court, the Supreme Court narrowly ruled that the dismissal by the lower court made the case moot and that it no longer had the authority to rule in the case.

“Because the trial court’s interlocutory order merged into the final judgment and no longer exists, we cannot grant the relief the parties seek,” the majority opinion written by Boyd stated. “As a result, any decision we might render would constitute an impermissible advisory opinion, and these consolidated causes are moot.”

Four dissenting justices led by Chief Justice Nathan Hecht, argued they should rule on the case because the public has an interest whether ERCOT can be sued in the aftermath of last month’s storm. Several lawsuits have been filed against the state grid manager, including over the deaths of an 11-year-old boy and a 95-year-old man, who were both found dead in their freezing Houston-area homes.

“The answer to the immunity issue in this case has become perhaps more important to the public than even to the parties,” the minority opinion, written by Hecht stated. “The parties want to know. The public wants to know. The court refuses to answer.”

The ruling by the high court has widespread implications in the wake of last month’s deadly and devastating blackouts, which contributed to more than 50 deaths and billions of dollars of property damage.

David Coale, an appellate partner with Dallas-based law firm Lynn Pinker Hurst & Schwegmann, said the Supreme Court could still decide on ERCOT’s immunity as appeals from the Panda Power case come up through the legal system. In the meantime, ERCOT’s immunity — upheld by a Texas appeals court in 2018 — remains intact, but the state grid manage faces an onslaught of legal cases without any guidance from the Supreme Court.

“The court may have punted, but it didn’t walk away,” Coale said. “It acknowledged that another appeal involving the same parties is on its way up to them, and it can revisit these issues then.”

See here and here for some background. I guess I can understand the “let’s do this all in the correct order” idea, but as the story notes the question about whether ERCOT has sovereign immunity or not is very pertinent right now. Maybe if the ultimate decision is that ERCOT cannot be sued it would be nice to let all those folks who are now suing them know, so they won’t waste a bunch of time and money pursuing their cases. I’m not a lawyer, what do I know? You can find all the relevant opinions and concurrences and dissents here if you need a little light reading for the weekend.

UPDATE: Forgot to mention that Harris, Fort Bend, and Travis Counties submitted amicus briefs urging SCOTUS to find in favor of ERCOT not having sovereign immunity. This Bloomberg article, which is behind their paywall but which you might be able to see if you haven’t exceeded your monthly allowance, details those filings.

Suing Griddy

This is going to be interesting.

A Chambers County resident filed a class-action lawsuit against electricity retailer Griddy on Monday, accusing the provider of price gouging customers during last week’s freeze. She is seeking $1 billion in relief for affected customers.

Attorneys for Lisa Khoury said in the lawsuit that her bill spiked to $9,340 the week of the storm, compared to her average monthly bills that range from $200 to $250. Griddy drafted payments from Khoury’s bank account several times, according to the lawsuit, pulling $1,200 before she blocked further charges from her bank. She still owes thousands.

Griddy passes wholesale electricity rates directly to customers, who in turn pay the company $10 a month. This differs from fixed-rate electricity plans which offer a consistent rate regardless of market conditions.

But because of a price hike fueled by a shortage of supply and skyrocketing demand, some customers were faced with bills charging tens of thousands of dollars. While electricity bills are likely to rise across the board, Texans on variable rate plans faced immediate and alarmingly high prices.

Texas’ Public Utility Commission, appointed by Abbott, raised the wholesale market price of electricity to $9 per kilo-watt hour — a 7,400% increase over the average 12 cents per kilo-watt hour — in response to rising demand. The hope was power generators would be enticed to produce more electricity.

“Energy prices should reflect scarcity of the supply,” the order stated.

Representatives for Griddy could not immediately be reached for comment. The electricity retailer addressed concerns of price gouging on its website and firmly placed the blame on the Public Utility Commission. The company states that it did not profit from raised prices.

A quick perusal of Griddy’s Twitter shows that they are blaming the PUC, and that they did suggest alternate electricity providers for their customers to switch to during freeze days; there are several news stories, including this one that ran in the Chron, about that as well.

This is one of those situations where the system is working exactly as designed – here are a couple of stories that explain the mechanics of this. I guess the courts could rule that what the PUC did violated the state’s laws on price gouging, but that seems like a stretch to me. I Am Not A Lawyer, so if you know better than me, please speak up.

More likely, there will be some kind of legislative solution to this. This Trib story goes into that option.

Gov. Greg Abbott and Texas lawmakers are promising relief for Texans hit with massive electric bills after a winter storm bludgeoned the state’s power grid, leaving millions of residents freezing without electricity.

But how they’ll accomplish that remains unclear. The state’s deregulated electricity market not only allows for staggering price spikes, but effectively compels them for some customers.

While many Texans are on “fixed rate” electricity plans that insulate them from market swings, others pay rates tied to the spot price of wholesale electricity, which skyrocketed during the storm.

As the bad weather bore down, it froze natural gas production and wind turbines, choking off the supply of electricity as demand skyrocketed. In response, the Public Utility Commission, appointed by Abbott, let the wholesale market price of electricity rise to $9 per kilo-watt hour, a 7,400% increase over the average 12 cents per kilo-watt hour.

The rate hike was supposed to entice power generators to get more juice into the grid, but the astounding costs were also passed directly on to some customers, who were suddenly being billed more for electricity each day than they normally pay in a month.

[…]

Kaiba White, an energy policy specialist with consumer advocacy group Public Citizen, said the costs would be passed on to customers one way or another.

“If they [the electric provider] don’t have a mechanism that allows them to do that in the immediate — like on the next bill or the next several bills — it’ll end up getting rolled into the overall cost of service,” she said. “It’s just a matter of whether it’s going to get passed on in an immediate way, in a shocking way … or spread out over time.”

Tim Morstad, associate state director with the Texas AARP, said “prices are going to rise” but with a delay for those not on variable rate plans.

“Forgive me for stepping back to say — this system is truly designed to have high prices and huge fluctuations. And putting consumers through that by design is a bad process. It’s setting people up for pain,” he said.

Texas has an unusually deregulated electricity market that’s touted for offering customers the ability to pick from hundreds of plans offered by dozens of electric providers. Parts of the state are carved out, including cities like Austin, that get energy from a municipally owned utility, or people served by cooperatives. Those too could see cost increases down the line.

Lawmakers and Abbott have pledged to protect consumers from the big bills, and excoriated the Electric Reliability Council of Texas for the outages last week. The reliability council, which operates the power grid that covers most of the state, is overseen by a Public Utility Commission.

Abbott’s office did not respond to a question about what options were on the table.

Lawmakers have demanded that the utility commission roll back its decision to allow the huge rate increases, or suggested cobbling together some package of emergency waivers or relief money to buffer Texans’ from the high bills.

“We cannot allow someone to exploit a market when they were the ones responsible for the dire consequences in the first place,” said state Rep. Brooks Landgraf, R-Odessa.

I have no idea what Abbott will suggest. He’s nobody’s picture of a creative thinker, and “solving problems” is not in his skill set. I’m hardly an expert either, but it seems to me that the first order of business is to prevent people from getting multi-thousand-dollar electric bills, and the simplest way to do that is probably just to order everyone’s bill capped at some value that relates to their usual experience, and have the state pick up the difference since the providers do in fact have the legal right to charge these amounts. That’s the easy part. The much harder question, at least for the leadership we are stuck with, is what to do about it for the future. That either involves some form of re-regulation that puts limits on how “free” the electricity market is, or ignoring it and hoping you survive electorally. I know what I’d do, but I’m not a Republican. Good luck with that.

One more thing, as long as we are talking about freeze/blackout-related lawsuits:

The family of an 11-year-old boy who died last week in Conroe during power outages while Texas endured a freezing winter storm is suing Entergy Texas and operator of the state’s power grid for a total of $100 million.

In the lawsuit filed Saturday, the family said Cristian Pineda died of hypothermia after the temperature in his house plunged due to the forced blackouts. Pineda’s family of five shared a single room for warmth, and Cristian shared a bed with his younger brother, the lawsuit states.

His family found Cristian unresponsive in the morning. The Houston Chronicle first reported news of the lawsuit.

The family is suing the Electric Reliability Council of Texas, which operates the decentralized electrical grid system. The Texas grid is not governed by federal regulations.

As the story notes, our old buddy Tony Buzbee is filing this lawsuit, along with at least seven others, against ERCOT. Whether or not he can do that is an open question.

ERCOT has sovereign immunity, a well-established legal principle that protects governmental agencies from lawsuits. ERCOT, a private nonprofit corporation overseen by the Texas Legislature and the Public Utility Commission, is the only grid manager in the country with such protections.

A pending decision by the Texas Supreme Court, however, could change that. Justices on the state’s highest court are expected to rule this year on a case between Dallas utility Panda Power and ERCOT that could strip the Texas grid operator of its sovereign immunity, leaving it open to lawsuits that ERCOT has said could cripple the agency.

The ruling by the high court will have widespread implications in the wake of last week’s blackouts. It would not only determine whether Texans can use the legal system to hold ERCOT accountable for power outages that led to more than 48 deaths and billions of dollars of property damage, but also the future of ERCOT and the state’s power markets if the court opens the door to the likely flood of lawsuits.

[…]

“The political rhetoric around ERCOT and the weather emergency has embraced transparency and accountability,” Rottinghaus said. “A ruling that holds ERCOT immune from such lawsuits may run against that. It could be a political liability.”

Panda Power filed suit in 2016 against ERCOT, alleging the grid operator issued “seriously flawed or rigged” energy demand projections that prompted the Dallas power company to invest $2.2 billion to build three power plants early last decade. The plants ended up losing billions of dollars, with one forced into bankruptcy.

ERCOT’s reports calling for more power generators came in the aftermath of a major ice storm in February 2011, which crippled Texas power plants and forced rolling blackouts across the state.

Panda Power’s case was halted in 2018 when an appeals court in Dallas asserted ERCOT was protected from lawsuits by sovereign immunity. The Texas Supreme Court in June 2020 said it would review the appellate court decision, heard the case in September 2020 and is expected to render a decision before it recesses in June.

We’ll see about that. There’s definitely some pressure, on the courts and on the Lege and on Greg Abbott, to Do Something about all this – and again, I remind you, that the “all this” in question is what was supposed to happen based on existing laws. How long that pressure lasts, and what happens if there are no legal or legislative outlets for it, that’s the big political question.

UPDATE: Multiple ERCOT board members have resigned. All are folks who did not live in Texas, which yes is one of the weirder things about ERCOT. Not directly related to this story, but this is as good a place as any to note it.