The Texas Supreme Court on Friday left standing an appellate ruling granting ERCOT sovereign immunity from lawsuits, an issue the courts will likely revisit in suits involving last month’s blackouts (18-0781).

Five justices on the nine-person court said a lower court’s dismissal of a complaint in a case that began five years ago rendered the case moot and that, according to the Texas Constitution, they no longer had jurisdiction to rule in the case. The procedural ruling means that for the time being, ERCOT still enjoys sovereign immunity, as do many governmental agencies.

Panda Power sued ERCOT and three of its officers for fraud, misrepresentation and breach of fiduciary duty in 2016, claiming it was led by the grid operator’s demand projections to spend $2.2 billion on three gas-fired power plants that were never needed. ERCOT argued the case should be dismissed because the Public Utility Commission has exclusive jurisdiction over Panda’s claims.

A trial court ruled in Panda’s favor, but ERCOT appealed and the 5th Court of Appeals in Dallas ruled that the grid operator is not a governmental unit but was entitled to sovereign immunity. The appeals court ordered the trial court to dismiss the lawsuit. Panda then appealed to the Supreme Court, leading to the decision Friday.

“Because the trial court’s interlocutory order merged into the final judgment and no longer exists, we cannot grant the relief the parties seek,” the majority said. “As a result, any decision we might render would constitute an impermissible advisory opinion, and these consolidated causes are moot.”

Chief Justice Nathan Hecht was among four who dissented from the ruling, saying the majority’s procedural ruling was incorrect.

“The immunity issue has been important to [Panda and ERCOT] since the case was first filed in the trial court more than five years ago. Now it happens that the public stakes are high too,” Hecht wrote. “After Winter Storm Uri last month, the public also wants to know whether ERCOT can be sued. 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 parties want to know. The public wants to know. The court refuses to answer. The court can resolve the parties’ dispute, but instead it chooses delay and wasting more of the parties’ and judicial system’s time and resources.”

The Panda case now returns to the appeals court.

ERCOT, which has said it needs immunity from lawsuits because it is funded by generators’ transaction fees, welcomed the ruling.

In an emailed statement, spokesperson Leslie Sopko said, “ERCOT looks forward to presenting these arguments in the court again once the pending case in the Dallas Court of Appeals has concluded.”

February’s outages prompted lawsuits by individuals, counties and ERCOT market participants against the grid operator, PUC and other market participants. (See “ERCOT, MPs Hit with Lawsuits,” Texas PUC Turns Focus to Customer Bills.)

The winter storm and the ensuing dayslong blackouts have been blamed for at least 57 deaths.

House Ignores Senate Repricing Bill

The Texas House State Affairs Committee last week voted out six bills related to the February blackouts, but it declined to take up a bill, rushed through the Senate on March 15, that would reprice billions in market transactions piled up during 32 hours of scarcity pricing after the grid was stabilized last month.

During a press conference following the committee votes, Lt. Gov. Dan Patrick, who presides over the Texas Senate, cited a nonbinding legal opinion from Attorney General Ken Paxton in making his case that the PUC has the authority to retroactively reset prices.

Patrick called on Gov. Greg Abbott to use his emergency powers to force the PUC the reprice the market transactions, which amount to $5.1 billion. Commission Chair Arthur D’Andrea, who resigned last week but retains his position until a successor is named, has steadfastly refused to order the ERCOT market be repriced. (See D’Andrea Resigns from Texas Commission.)

“Under an emergency declaration the governor has extraordinary power. He is the commander-in-chief. He is the ruler of all of the agencies,” Patrick said. “He can make this corrective action if he so chooses.”

Paxton’s opinion said that a court would likely find such an action legal if it “furthers a compelling public interest.”

“Such authority likely could be interpreted to allow the [PUC] to order ERCOT to correct prices for wholesale electricity and ancillary services during a specific timeframe,” Paxton wrote.

The six bills passed on by the House committee included:

• HB10: replaces five unaffiliated directors on the ERCOT board with three members, including one representing residential consumers, appointed by the governor, and one each appointed by the lieutenant governor and the speaker of the house.
• HB11: defines “extreme weather emergency” and requires the PUC to order each generator in the ERCOT market to implement measures to prepare for such events by Nov. 1 and to restore service as soon as possible following an event.
• HB12: orders a study on a statewide disaster alert system similar to the state’s Amber Alert system.
• HB13: establishes the Texas Energy Disaster Reliability Council — comprising ERCOT, PUC, Railroad Commission and Texas Division of Emergency Management personnel — to prevent extended power outages caused by a disaster and coordinate other activities during the disaster.
• HB16: prohibits the sale of wholesale-indexed retail electric products, such as those once offered by now-bankrupt Griddy Energy, whose customers received bills of $5,000 or more in February.
• HB17:  prevents any Texas regulatory authority, planning authority or political subdivision from adopting or enforcing measures that prohibit utility connections based on energy sources. According to the Natural Resources Defense Council, Texas is among at least 15 states that are considering “pre-emption” legislation, including Arkansas, Colorado, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, North Carolina, Ohio, Pennsylvania and Utah.

Committee Chair Chris Paddie said the bills are essentially shells, leaving room for revisions as they move through the legislative process.