The Texas Supreme Court has agreed to review a lower court’s ruling that the state power grid manager is entitled to sovereign immunity, a well-established legal principle that protects governments and their agencies from lawsuits.
The review, announced last week, is a win for electricity generator Panda Power. The Dallas company sued the Electric Reliability Council of Texas four years ago, alleging that the grid manager manipulated the state’s power needs to encourage new power plant construction to relieve political pressure building in Texas. Panda Power built three power plants and invested billions of dollars based on ERCOT projections that Texas desperately needed more generation to meet growing power demands.
But ERCOT, a private nonprofit corporation, argued that it needs immunity from lawsuits because it is funded by transaction fees paid by power generators and a verdict ordering it to pay sizeable damages would force it to spread the cost among generators, which in turn, would pass it on in the form of higher electricity prices.
ERCOT is the only grid manager in the nation with sovereign immunity.“Panda is excited about having the opportunity to address with the state’s highest court whether ERCOT is above the law,” said Werner A. Powers, a lawyer with Haynes and Boone in Dallas representing Panda Power .
The ruling by the high court is expected to have broad implications in Texas and on the power grid in which the state and its economy depends. It could determine whether electricity buyers and sellers can hold the grid manager responsible for pricing errors, poorly conceived power supply forecasts or life-and-death consequences of power outages.
“ERCOT looks forward to presenting its argument before the Supreme Court later this year,” ERCOT spokeswoman Leslie Sopko said.
For the full version of this story, please visit the Houston Chronicle.