Following a three-week bench trial before Bexar County Judge Laura Salinas, the court has entered a $393 million final judgment in Energy Transfer’s favor in a contract dispute stemming from a spike in natural gas rates in February 2021 during Winter Storm Uri.
Judge Laura Salinas ruled that San Antonio’s municipally owned utility, CPS Energy, breached its supply contracts and must pay Energy Transfer’s subsidiaries for unpaid invoices, compounding interest, and attorney fees.
Energy Transfer’s trial counsel, Bryce Callahan of Yetter Coleman, said it was a fixed-price deal.
“I think fundamentally the case was about living up to the contracts that you knowingly entered,” Callahan said.
In a statement to The Texas Lawbook, CPS Energy expressed its disappointment with the ruling and warned of the impact it could have on the state’s utility infrastructure during emergencies.
“CPS Energy is disappointed by the Court’s decision, which will cost this community more than $390 million and may effectively end a key legal safeguard against grossly unfair treatment for essential services like natural gas during the next statewide disaster,” CPS Energy said in its statement. “This verdict and costs related to the Uri litigation continue to be allocated to the $1 billion regulatory asset approved by the CPS Energy Board and San Antonio City Council.”
The utility declined to comment further, noting that it is actively considering its appellate options.
In its final judgment, the court awarded $870,000 in conditional attorney fees to Energy Transfer in the event that CPS Energy should take the case to the Texas Supreme Court and lose.
CPS Energy claimed Energy Transfer’s gas prices were “unconscionable” during Winter Storm Uri and had price gouged during a crisis.
Callahan said one of the key pieces of evidence at trial was showing that CPS Energy profited from the gas it received from Energy Transfer during the winter storm. He explained that there were days when they had more electricity than their customers needed, so they sold that electricity back to the Electric Reliability Council of Texas and made millions.
Energy Transfer had invoiced CPS Energy $308,872,569 for gas it delivered during the winter storm. CPS Energy disagreed with the invoice, claiming that $38.83 per unit of gas was the maximum price the spot market could reach. Instead, CPS Energy paid Energy Transfer $51,950,243.92.
CPS Energy filed suit against Energy Transfer a month after the winter storm and sought a temporary restraining order to prevent Energy Transfer from enforcing the contract.
Judge Salinas found that the contracts were not unconscionable and were fully enforceable, and thus CPS Energy was in breach.
The judge awarded $263,695,915 to Energy Transfer on its counterclaims seeking payment for its unpaid invoices and contract interest. She also awarded $119,097,280 for prejudgment interest on the amount CPS Energy owed. Additionally, Judge Salinas awarded $9,392,123.07 in attorney fees.
Paul Yetter, Tyler Young, Mollie Bracewell, Alishan Alibhai and Daisy Gray of Yetter Coleman, Emma Cano of Jefferson Cano and Energy Transfer’s assistant general counsel Jessica Sykora also represented Energy Transfer.
Lauren Valkenaar, Rick Rosenblum, and Dylan Fedderman of Valkenaar O’Donnell, David Shank of Scott Douglass & McConnico and Dale Wainwright of Greenberg Traurig represented CPS Energy.
The case number is 2021CI05138.