AUSTIN – Citing Chaparral Energy’s failure to first lodge a claim with state regulators, the Texas Supreme Court on Friday tossed out a $416,000 jury verdict against Oncor Electric for delays in providing electricity to a Chaparral well site.
The ruling reverses a 2016 decision from El Paso’s Eighth Court of Appeals denying Oncor’s challenge on the jurisdictional issue. The Supreme Court said the state Public Utility Commission has exclusive authority to make preliminary determinations on Chaparral’s claims. Depending on those determinations, Chaparral might later be able to re-file its lawsuit in district court.
“When the Legislature creates a pervasive regulatory scheme, it intends for the agency with the appropriate expertise to make important determinations before the parties take their claim to the judicial system,” said Justice Jeffrey Boyd, writing for a unanimous court.
The lower court ruling had aggravated the state’s major electric utilities. In a joint brief to the Supreme Court, the utilities said the ruling was unprecedented and a threat to their operations.
The disputed contract was signed in 2007 and required Chaparral to pay Oncor $22,237 for its share of the cost to bring electricity to two wells Chaparral had drilled in Loving County. Oncor promised to provide a detailed installation schedule when it received the payment. Chaparral paid Oncor when it delivered a signed service agreement, but Oncor never provided the promised details.
Chaparral alleged that Oncor had promised completion of the work within ninety days, but blamed construction delays on problems obtaining easements to cross private land. Chaparral maintains that Oncor had not attempted to obtain the easements until months later, delaying the completion of the electric facilities for more than a year.
In its lawsuit, Chaparral says the delays cost over $300,000 to rent generators and purchase diesel fuel to provide power to the wells.
While Oncor’s appeal of the trial judgment was pending, the Second Court of Appeals in Fort Worth decided in an unrelated case involving Oncor that the PUC had exclusive jurisdiction over contract-breach claims. The utility then moved to dismiss Chaparral’s claim for lack of jurisdiction, arguing for the first time that the PUC has exclusive jurisdiction to resolve allegations.
Chaparral argued that the PUC has no authority to resolve a breach-of-contract claim or to award damages. The Oklahoma City oil and gas company said it would be denied its constitutional rights to open courts if forced to go before the PUC.
The Supreme Court said that although Chaparral’s contract claim does not involve Oncor’s rates, it does involve Oncor’s services and Texas law grants the PUC exclusive jurisdiction over those services.
The court also rejected Chaparral’s arguments for an “inadequate-remedy exception” to the PUC’s jurisdiction, saying that Texas law does not prevent Chaparral from obtaining damages in the district court after the PUC has exercised its jurisdiction.
Robert Wise of Lillard Wise Szygenda represents Oncor. Robert Witte of Strasburger represents Chaparral.
Read the court’s opinion here.