The Public Utility Commission of Texas claims that a decision issued 11 days ago by a Texas appeals court declaring that the emergency pricing orders issued by the agency in 2021 during Winter Storm Uri were unlawful needs to be immediately reversed because it “has thrown Texas’s electricity and associated markets into confusion.”
Lawyers for the PUC filed an official petition for review with the Texas Supreme Court on Thursday arguing that the Third Court of Appeals in Austin “had no jurisdiction to validate or invalidate already-expired orders.”
The Austin appeals court ruled on March 17 that two orders issued by the PUC during Winter Storm Uri in February 2021 increasing electric rates from the market price of $1,200 per megawatt hour to $9,000 per megawatt-hour was an “operation of executive fiat” that violated Texas law.
More than a dozen power companies, including Luminant Energy, Pattern Energy, Exelon Generation, Constellation NewEnergy and Brazos Electric Coop, filed the petition in March 2021 claiming the PUC rules illegally forced them to purchase electricity at exorbitant prices from the other energy companies. They are challenging the rate and demanding refunds.
The Austin judges agreed with Luminant and ordered the dispute be returned to the PUC to reset the prices.
The PUC, however, appealed to the state’s highest court seeking a full reversal.
“The stakes are high. Billions of dollars are potentially implicated,” Texas Solicitor General Judd Stone II and Deputy Solicitor General Lanora Pettit wrote in the 18-page appeal to the state Supreme Court. “So is the Commission’s ability to react quickly in emergency situations to save lives by minimizing blackouts and preventing a system-wide collapse.”
“Nevertheless, the Third Court was not the right forum to hear these claims because they are moot. The orders expired years ago,” the petition states.
In its opinion 11 days ago, the Thirds Court of Appeals wrote that the Texas Legislature gave the appeals court the power of review and jurisdiction and that state law requires that the PUC set rates based on a “preference for reliance on competition rather than regulation.”
“In extreme circumstances under extraordinary pressure, the commission exceeded its power by eliminating competition entirely,” the court of appeals decision in favor of Luminant stated. “The Legislature clearly stated that the commission’s rules must be limited so as to impose the least impact on competition.”
The PUC petition filed Thursday cited newspaper articles that quoted experts warning that the Austin appeals court decision could “create a gigantic mess.”
“At bottom, the court of appeals’ decision was impermissible judicial second guessing of agency action,” the PUC petition states. “It rests on faulty statutory interpretation that pursues one legislative policy goal to the exclusion of all others. And it has thrown Texas’ electricity and associated markets into confusion.”
The PUC asked the Texas justices to hear the appeal promptly.
“The court of appeals’ decision has introduced significant market uncertainty, and billions of dollars are potentially at stake,” the PUC states. “In addition, the court’s deeply flawed reasoning could be used to challenge other commission orders and rules on the ground that they do not sufficiently promote competition, regardless of what other critical statutory objectives are jeopardized.”
The case is Public Utility Commission of Texas v. Luminant Energy. No. 23-0231.