AUSTIN (KXAN) — Two more lawsuits were filed against the Electric Reliability Council of Texas this week, according to Travis County District Court records.
Since the February 2021 storm, dozens of lawsuits have been filed against the power grid operator, but so far, there have been questions about whether ERCOT could be immune from the challenges in court.
However, on Wednesday, a Dallas appellate court issued a ruling indicating ERCOT would not be protected by sovereign immunity — the protection afforded to government entities to prevent them from being sued while carrying out governmental functions.
In her opinion for the Fifth Court of Appeals, Justice Erin Nowell wrote while the Public Utility Commission of Texas maintains some authority over ERCOT, “ERCOT is a purely private entity that is not created or chartered by the government, maintains some autonomy, is operated and overseen by its CEO and board of directors, and does not receive any tax revenue.”
The ruling not only reverses a previous decision from a lower court, but it could have direct impact on wrongful death lawsuits filed by grieving families who lost loved ones during the freeze and one lawsuit filed by more than 100 insurance companies over losses from the storm damage.
The appellate court sent the case back down to the lower courts for further review.
- Read the full ruling here
The case began in 2016, when Dallas-area utility Panda Power accused ERCOT of publishing “flawed or rigged” projections regarding demand for energy production.
According to court filings at the time, Panda Power spent $2.2 billion to build three plants in Sherman, Texas, relying on “ERCOT’s false representations of market data.” Records show Panda Power’s legal team blamed what they called ERCOT’s “fraudulent scheme” for driving all three plants into financial crisis, KXAN investigators reported last year.
By 2018, the lower court found ERCOT could not be sued, because it was entitled to sovereign immunity and protected from paying damages stemming from lawsuits.
The question over whether ERCOT is a private entity or an extension of state government went all the way up to the Texas Supreme Court in March 2021. Divided 5-4, the Court declined to make a ruling in the Panda Power case, saying it did not have jurisdiction over the matter.
According to the majority opinion, “the constitution” prohibited the court from making a ruling, because the lower trial court entered a final judgment in the underlying suit before the higher court was asked to review the case.
In his dissent, Chief Justice Hecht wrote, “The answer to the immunity issue in this case has become perhaps more important to the public than even to the parties. The parties want to know. The public wants to know. The Court refuses to answer.”
He went on to say, “The Court can resolve the parties’ dispute and grant relief, however it decides the
immunity issue, but instead it chooses delay and wasting more of the parties’ and judicial system’s time and resources.”
After that, the matter returned to the Fifth Court of Appeals, on separate appeal involving Panda Power and ERCOT — the appeal on which that court rule ruled just this week.
The matter could eventually return before the Supreme Court, and in fact, in his aforementioned dissent Chief Justice Hecht guessed that could happen “maybe only a year or so from now.”
As lawsuits mount against ERCOT, the grid operator has asked for the cases to be reviewed by a Multi District Litigation panel. This panel could decide to merge the dozens of lawsuits filed against it, so the cases would be handled in a single court. That decision is pending.
