With state electric grid operators eyeing the potential for extreme cold early next year, the Texas Supreme Court has agreed to hear a mandamus petition from transmission and distribution utility companies seeking dismissal of gross negligence and intentional nuisance claims over devastating winter storm blackouts in February 2021.
Justices will hear arguments Feb. 19, four years after Winter Storm Uri caused widespread, prolonged power outages resulting in deaths and property damages.
The court will review an April decision by a three-judge panel of the Fourteenth Court of Appeals in Houston that more than 15,000 plaintiffs may move forward with certain claims in their wrongful death, personal injury and other Winter Storm Uri-related lawsuits seeking billions of dollars in damages.
The Fourteenth Court said the utility companies were entitled to dismissal of the plaintiffs’ claims for negligence because Texas law does not impose common-law negligence duties associated with emergency power interruptions, ensuring adequate generation or warning of anticipated power outages. But the court of appeals said that the tariff, which is essentially the state-law mandated contract between customers and the transmission and distribution companies, does allow for gross negligence and intentional nuisance claims.
More than 200 lawsuits, consolidated into multidistrict litigation before Harris County MDL Court Judge Sylvia Matthews, allege mismanagement by companies including CenterPoint Energy, Oncor Electric Delivery and American Electric Power constituted an intentional nuisance.
Uri was a perfect storm for the electric grid that serves most of Texas as plunging temperatures sparked record-high demand and severely reduced energy supply caused the grid to become unbalanced. Beginning at 1:25 a.m. on Feb. 15, 2021, ERCOT began ordering TDUs to cut service to set amounts of customer demand to prevent the grid from collapsing.
Millions of Texans remained without heat and power for several days as the weather remained brutally cold. Media reports have attributed nearly 250 deaths to the disaster.
The transmission and distribution companies say they could be the only category of many entities involved in the crisis to have a legal duty to deliver electricity after court rulings in other Uri-related cases went in favor of natural gas providers, power generators, retail electric providers and ERCOT defendants.
Michael A. Heidler, an appellate partner at Vinson & Elkins, said in the companies’ petition for review that the Supreme Court should bar the plaintiffs’ claims before significant resources are spent adjudicating “15,000 claimants’ baseless complaints.”
“In these exigent circumstances, no court has imposed common-law duties on TDUs to supply electricity to any particular customers for any particular duration. Established Texas law confirms that courts should not impose such a duty in these circumstances. Plaintiffs’ gross-negligence claim should be dismissed,” Heidler wrote.
He said the companies did not create a nuisance by shedding load in response to ERCOT’s orders. Citing a 2016 Texas Supreme Court pipeline case, Heidler said that nuisance is a condition such as smoke, gases or odors that substantially interferes with use and enjoyment of land.
“Here, the ‘condition’ interfering with use and enjoyment of land was cold air. But it was Mother Nature—not TDUs — that blew cold air onto Plaintiffs’ properties,” Heidler said.
In a response for real party in interest/plaintiff Bernadine Edwards, Dallas lawyer S. Ann Saucer said the utilities are not being sued for complying with ERCOT’s load shed orders but because they committed malfeasance that ERCOT did not order.
“TDUs are not being sued because they failed to deliver uninterrupted adequate power but because they, either intentionally or via gross negligence, created part of the power shortfall, told untruths to their customers, and then deprived their misled customers of power for undue stretches of time rather than roll blackouts, with catastrophic results including deaths,” said Saucer of Nachawati Law Group.
The utility companies are being supported with briefs from the industry and other business groups.
Lee Parsley and Will Bashur, the general counsel and assistant general counsel for Texans for Lawsuit Reform, referenced what they said was a recent trend of mass tort litigation nationwide moving into the realm of public nuisance, citing the example of lawsuits by some state attorneys general attempting to blame large corporations for climate change and plastic pollution. They said the TDUs already are subjected to regulation and penalties for outages and have no ultimate authority over outage timing.
“In addition to considering regulation as a factor, this Court should preclude any nuisance action against a regulated industry when the action in question has been taken to comply with a mandate from an administrative agency such as ERCOT,” they said.
A letter on behalf of Edison Electric Institute by Beth W. Petronio of K&L Gates in Dallas mentioned a discussion at an ERCOT meeting earlier this month that warned of the potential for extreme cold while saying the power grid is better equipped for a major storm.
“With an increase in devastating weather events in Texas and across the United States, there is likely to be an increased need for ERCOT or other utility regulators to issue similar load shed orders. Just last week at ERCOT’s December 3, 2024 meeting, ERCOT officials predicted a 50% chance of rolling outages if Texas experienced a storm similar to Winter Storm Elliott that occurred in December 2022, and an 80% chance that the ERCOT grid would require additional load shedding if Texas experienced a severe winter storm similar to Uri,” Petronio said.
“Subjecting utilities to common-law liability for compliance with their mandated load shedding obligations could have a devastating financial impact on individual utilities and would negatively impact the electricity market generally.”
Amicus filings also have been submitted by Entergy Texas and the Texas Civil Justice League.