EnergyStatewide NewsTexas Supreme Court Declines to Rule on ERCOT Immunity

Whether ERCOT can be sued is a question that must be adjudicated another day after the Texas Supreme Court declined to rule definitively on the question.
March 19, 2021
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Can the Electric Reliability Council of Texas (ERCOT) be sued for its actions during the February blackouts? That is a question currently in front of courts, but one the Supreme Court of Texas (SCOTX) has eschewed for the time being.

Asked whether ERCOT enjoys the benefits of immunity from legal reprise by multiple conglomerates under the Panda Power umbrella — a utility company based in Temple — SCOTX decided in a 5 to 4 ruling it could not entertain a mandamus request because a lower court had already issued its ruling on the question.

A mandamus petition is a request for a higher court to command a governmental body to issue a certain action. It is often used in time-sensitive situations to expedite the highest court’s ruling on the question at hand that will likely reach it anyway.

Panda Power filed for mandamus relief from SCOTX, but before the state’s highest court could rule, the trial court hearing the case issued its ruling. And so, SCOTX ruled the mandamus petition was now “moot.”

The court’s opinion, signed onto by Justices Jeffrey Boyd, Jimmy Blacklock, Jane Bland, and Rebeca Huddle, reads, “The mootness doctrine — a constitutional limitation founded in the separation of powers between the governmental branches — prohibits courts from issuing advisory opinions.”

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An advisory opinion does not have enforcement authority and is just a statement or analysis of constitutionality.

“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,” it added.

Because the court of appeals issued its decision siding with ERCOT’s immunity claim in October 2019, after SCOTX was petitioned to consider the case, the court believes the motion to be moot.

In a concurring dissent, Justices Eva Guzman, Debra Lehrmann, and John Devine countered that argument, saying, “A case becomes moot when the parties lack (1) a justiciable controversy between them or (2) a “legally cognizable interest in the outcome[.]”

The “legally cognizable interest in the outcome” is the answer to the question of whether ERCOT possesses immunity from lawsuits — something that is irrefutably significant after the winter storm.

In a pointed dissent, Chief Justice Nathan Hecht stated, “Will ERCOT be immune to claims against it for failing to prevent the power outages across Texas that not only crippled millions of users but resulted in water outages that were at least as bad, if not worse? The answer to the immunity issue in this case has become perhaps more important to the public than even to the parties.”

A concurring opinion written by Blacklock directly addresses this argument, stating, “What ‘the public wants’ in response to Texas’s recent winter-weather difficulties is a question the executive and legislative branches of government will consider.”

“The judiciary’s job, by contrast, is to apply the law to the facts of the cases properly brought before it without regard to public opinion.”

The case stems from accusations of “fraud, negligent misrepresentation, and breach of fiduciary duty” a decade ago when ERCOT issued a generation shortfall projection, which in-turn led Panda Power to invest in two new generators. After the company began construction, ERCOT revised its projection, predicting generation capacity excess — a drastic change in the market forecast.

In response to the challenge, ERCOT argued only the PUC had jurisdiction over its actions. Through proper judicial procedure, the appeals court decision will likely be appealed.

While the case is considering a question asked well before the February blackouts, its ultimate outcome will either pave the way for, or slam the door on, the many post-winter storm lawsuits sure to come.

SCOTX had been considering the case since 2018 and heard oral arguments last September. After two years of delayed consideration, the sudden immediacy of this ruling is a product of the winter storm last month.

However, a footnote within the opinion indicates responsibility for the delay falls squarely on the parties involved — Panda Power and ERCOT — who between them both “requested and received sixteen separate thirty-day extensions of their filing deadlines.”

And while those two parties have a vested interest in their personal dispute, the consequences extend beyond it.

There are three guarantees in life: death, taxes, and the fact that ERCOT will be sued six ways to Sunday for its role in the blackouts. The question is whether those lawsuits are invalid out-of-hand or not.

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Brad Johnson

Brad Johnson

Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.