Texas Supreme Court: ERCOT not liable for 2021 winter storm power grid failures
In a narrow 5-4 decision made on Friday, the Supreme Court of Texas has ruled that the Electric Reliability Council of Texas (ERCOT), which oversees the power supply for the majority of Texas, is protected by sovereign immunity. This ruling will likely free the non-profit corporation from lawsuits filed by thousands of Texans for deaths, injuries, and damages incurred following the deadly 2021 winter storm, unless lawyers find another way forward.
ERCOT is now able to qualify for immunity as it \”provides an essential government service\” according to Chief Justice Nathan Hecht’s majority opinion. State law intends for ERCOT to have the power of an \”arm of the State government,\” thus making it more than just a purely private entity. If anyone wants to hold ERCOT accountable for its actions, it should be the state regulators or the Legislature, not the courts, argued Hecht.
The 2021 winter storm caused freezing temperatures that stretched the state’s power supply to its limit, and was responsible for ERCOT calling for power to be cut to millions of homes and businesses to prevent the grid’s collapse. The freeze also resulted in over 200 deaths, and experts estimate financial losses incurred totaled between $80 billion and $130 billion, caused by physical damage and missed economic opportunities.
Thousands of residents accused ERCOT, power companies, and distribution companies of failing to prepare for the freezing weather. Lawyers have anticipated that the high court’s decision will allow ERCOT to be dismissed from the litigation, but this does not shield other defendants.
Attorney Mia Lorick, who represents some of the plaintiffs, stated that there is only a slim chance that claims against ERCOT can remain after the ruling. Lawyers may argue that their cases have differences that somehow skirt the sovereign immunity finding.
Majed Nachawati, whose firm represents other plaintiffs in related cases, expressed his disappointment with the court’s decision. He argued that citizens rely on the judiciary to protect their interests, especially in cases where people have lost their lives. Four justices also shared a similar view, claiming that private entities such as ERCOT are not sovereign, and making them so undermines the publics trust. They argued that no statute designates ERCOT as part of the government and that courts should not be barred from hearing claims against it.
ERCOT spokespersons have stated that they are pleased with the decision, while CPS Energy, San Antonio’s municipally owned utility, has expressed disappointment but continued to express its gratitude for the four justices who agreed with them. Even though the ruling led to critical discussions at the highest levels necessary to improve the power grid and energy market, they sought relief for customers.
The Texas Tribune, a nonprofit, nonpartisan news organization that informs Texans and engages with them about public policy, politics, government, and statewide issues, has been a financial supporter of CPS Energy. In conclusion, the decision has a significant impact on the legal landscape going forward, and plaintiffs will now have to find alternative approaches to receive justice.
