Texas Supreme Court Rules Utility Regulators Acted Within Authority in Raising Prices During Deadly Blackouts

Texas utility regulators were within their rights to raise electricity prices to $9,000 per megawatt-hour during the deadly February 2021 winter storm, the state's Supreme Court ruled Friday [https://www.txcourts.gov/media/1458733/230555.pdf]. The 7-0 decision [https://www.txcourts.gov/media/1458733/230555.pdf] reverses a lower court's ruling [https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=4827094a-cfe3-4d15-9063-8791bee3b2c8&coa=cossup&DT=OPINIONS&MediaID=53a6ad14-295a-4c54-83f0-d65e68732c4f] that found the Public Utility Commission (PUC) overstepped its authority, leaving utility companies with huge losses.

"The Commission has the expertise to manage the electric utility industry; the courts do not," wrote Chief Justice Nathan Hecht.

Prices were raised to encourage more power generation, but the move resulted in $16 billion in overcharges [https://www.dallasnews.com/business/energy/2021/03/04/ercots-pricing-decision-post-storm-resulted-in-16-billion-in-overcharges-for-texans/] in just four days, with consumers and businesses facing sky-rocketing bills.

The PUC argued its decision was made to stabilize the grid, and that it followed legal guidelines [https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=107036fc-e77d-470e-b2ee-bdc6e1a2f5f0&coa=cossup&DT=BRIEFS&MediaID=562317d9-9429-4590-a185-abfb38cca121]:

"The Commission and ERCOT are charged with ensuring the power grid’s reliability — not pursuing competition at any cost," wrote Principal Deputy Solicitor General Lannora Pettit.

The fallout from the energy crisis saw PUC and ERCOT leadership resign or be fired, and the energy price cap has since been lowered to $5,000 per megawatt-hour to prevent a reoccurrence.

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URLs:

Ruling document: [https://www.txcourts.gov/media/1458733/230555.pdf]

Lower court's ruling: [https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=4827094a-cfe3-4d15-9063-8791bee3b2c8&coa=cossup&DT=OPINIONS&MediaID=53a6ad14-295a-4c54-83f0-d65e68732c4f]

$16 billion in overcharges: [https://www.dallasnews.com/business/energy/2021/03/04/ercots-pricing-decision-post-storm-resulted-in-16-billion-in-overcharges-for-texans/]

Luminant's argument: [https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=4827094a-cfe3-4d15-9063-8791bee3b2c8&coa=cossup&DT=BRIEFS&MediaID=02a14bc8-d451-49e9-87c3-3e8991f7c9a2]

UT report on grid failures: [https://comptroller.texas.gov/economy/fiscal-notes/archive/2021/oct/winter-storm-impact.php#:~:text=According%20to%20the%20report%2C%20multiple,and%20timing%20of%20the%20storm.]

PUC's legal defense: [https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=107036fc-e77d-470e-b2ee-bdc6e1a2f5f0&coa=cossup&DT=BRIEFS&MediaID=562317d9-9429-4590-a185-abfb38cca121]