In late February of 2021, Winter Storm Uri caused record-breaking low temperatures throughout the state of Texas. The resulted in an overwhelming demand on the electrical grid that lead to failures and outages at power generation facilities. Over 2.7 million Texas households were left without power, people died, and 254 counties experienced property damage as an unprecedented winter storm caused rolling blackouts across much of the state. State leaders were divided on placing blame for the outages, with some immediately naming wind and solar energy as the culprits and others putting the blame on the state’s electricity grid not being built to withstand the physical and demand-based pressure that occurs during severe winter storms. The deregulated, independent electricity grid in Texas has also come under scrutiny for being unable to receive power from the country’s two connected electric grids – the Eastern and Western Interconnections. As temperatures plummeted to record lows, key machinery at many of the state’s major coal plants, nuclear power plants, and natural gas plants froze over as demand for power surged to keep consumers warm. In a state that has an electric grid designed for extreme summer temperatures, many consumers, property owners, and businesses are looking for someone to blame for the Texas power grid failure during Winter Storm Uri. Lawsuits are being filed across the state for property damage, personal injury, wrongful death, business interruption, and more due to the severe winter storm.
Because Texas has a deregulated electricity market, consumers have a wide variety of providers to choose from that can provide fixed rates or variable rates. Normally this system functions well and is able to provide ample power to the state at average prices. During Winter Storm Uri, some electricity providers were forced to provide power to Texas at a wholesale price 300 times higher than normal, causing many consumers to receive power bills for thousands of dollars. One lawsuit alleges electricity company Griddy violated the Texas Deceptive Trade Practices Act and participated in price gouging during a natural disaster. This class action lawsuit seeks more than $1 billion in damages on behalf of all Texas Griddy customers who received “excessive charges” as a result of the winter storm. Griddy posted a statement on its company website stating that the Public Utility Commission of Texas (PUCT) directed ERCOT (Electric Reliability Council of Texas), the council that manages the flow of power to Texas homes, to set the wholesale price of power at $9/kWh temporarily while the grid was managing surging power usage as temperatures dropped. This price was left in place, though, as millions of customers had their power return after the storm. The PUCT is currently investigating electricity plans like Griddy’s that tie consumer costs to a wholesale rate.
Civil lawsuits have been filed alleging personal injury claims, property damage, and business interruption against various utility providers, ERCOT, and most any company associated with providing electricity. The lawsuits allege that the defendants failed to winterize their facilities, maintain the electrical grid in a reliable manner, warn the public of the likelihood of blackouts, and failed to obtain electricity to fill customer’s needs. The lawsuits focus on allegations that ERCOT failed to implement the recommendations resulting from that investigation that would have prepared the state for another serious winter storm. However, ERCOT’s status as an independent power grid made it not legally obligated to winterize its grid. Although local utilities may be sued, ERCOT has thus far been shielded from lawsuits by sovereign immunity.
The parties currently naming ERCOT as a defendant in their lawsuits must wait to see if the Texas Supreme Court will address and/or adjust the agency’s sovereign immunity status. Sovereign immunity protects government entities from being sued while carrying out government duties. The Texas Supreme Court is currently reviewing a 2016 court case involving ERCOT and Panda Power of Dallas, and depending on the decision, ERCOT’s sovereign immunity status could change. This would greatly influence lawsuits filed against the utility giant in 2021. If ERCOT loses its protected status, it will then be vulnerable to widespread lawsuits as a result of this winter storm and will potentially be responsible for paying millions in damages that could cripple the agency. If ERCOT retains its current status, there are very few legal avenues an individual or company can pursue to recoup damages from the entity as a result of the winter storm.
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