The Electric Reliability Council of Texas (ERCOT), a nonprofit organization that manages the state’s power grid, is facing a crucial decision by the Texas Supreme Court regarding its immunity from lawsuits related to the deadly winter storm in February 2021. The storm left millions of Texans without power and resulted in hundreds of deaths.
In the storm’s aftermath, many people, communities, and insurers have filed lawsuits against ERCOT. Their ability to move forward with those cases hinge on what the state’s highest civil court decides.
Does ERCOT qualify for Sovereign Immunity?
In arguments before the Texas Supreme Court, ERCOT’s lawyers have stated that the organization should be granted “sovereign immunity,” which would protect it from civil suits in the same way that government agencies are typically immune.
Sovereign immunity is a legal doctrine that holds that the government is immune from civil lawsuits or criminal prosecution. In Texas, this doctrine is embodied in the Texas Tort Claims Act. Under this act, the state can be held liable for injuries or damages caused by the wrongful actions of its employees, but only if those actions were taken within the scope of the employee’s official duties and were not committed with fraud, malice, or gross negligence.
ERCOT’s attorneys argue that because the organization is empowered by the state to fulfill a public function and is overseen by a state agency, the Public Utility Commission of Texas, it should not be held liable for the damages caused by the storm. They argue that the responsibility for legal claims against ERCOT should instead fall on the PUC.
ERCOT “has no function other than what the state assigned,” attorney Wallace Jefferson asserted. “It has no autonomy from the state. … It has no private interest. Its interest is in furthering the public’s interest in a reliable grid. The state controls its bylaws. And the state sets the fee that funds the organization.”
Jefferson was formerly an associate justice on the Texas Supreme Court. He left the bench in 2013 to join corporate defense law firm Alexander Dubose & Jefferson.
ERCOT can’t have it both ways
Attorneys for Panda Power Funds, a Dallas-based private equity firm, and CPS Energy, San Antonio’s energy utility, argue that just because ERCOT is regulated by a government entity does not mean it is a part of the Texas government.
CPS Energy is represented in the lawsuit by former Texas Supreme Court Associate Justice Harriet O’Neill. She asserted that the state Legislature had the authority to officially incorporate ERCOT into the government., “but despite many opportunities, including after the winter storm, the Legislature has never conferred government status on ERCOT, which it knows how to do.”
In materials provided to the court, CPS Energy also pointed out that ERCOT “itself has claimed not to be a governmental unit during certain times, while claiming the opposite during others.” For instance, ERCOT refused to provide documents in a Public Information Act following the 2021 storm request claiming it was not a public entity.
The Texas Supreme Court’s decision on ERCOT’s immunity will have a significant impact on the numerous lawsuits that have been filed against the organization, as well as the individuals and communities affected by the storm.
The court’s decision is expected to be issued in the coming weeks or months.
Read more about the legal arguments from both sides via reporting in the Texas Tribune and Austin American-Statesman. Additional reporting by The Houston Chronicle.
