Two subsidiaries of Dallas-based Energy Transfer this week countersued CPS Energy, the City of San Antonio-owned utility company, in a new court filing that says CPS is “pointing fingers at everyone but itself” with respect to the high natural gas prices that resulted from the Texas winter storm in February.
Monday’s countersuit comes after CPS, the plaintiff, made the first move on March 19 with a lawsuit that alleged Energy Transfer subsidiaries Houston Pipe Line Company and Oasis Pipeline unlawfully price-gouged during a declared disaster by charging CPS 15,000% more for natural gas than pre-storm prices. The lawsuit seeks more than $1 billion in damages and a declaration by the court that both the defendants’ $308 million energy bill and contract with CPS are unenforceable. CPS says it is willing to pay the lawful amount.
CPS Energy’s legal battle with Energy Transfer is just one of 15 similar lawsuits that the nation’s largest municipally-owned utility company filed in Bexar County in March against other major players in natural gas supply, including Vitol, Occidental, BP and Chevron. And the litigation is just a cluster of the countless commercial, property damage, wrongful death and other disputes that are anticipated to crop up as a result of winter storm Uri. CPS is also one of the numerous parties that has sued the Electric Reliability Council of Texas for its role in the astronomical Uri electricity prices.
According to HPL and Oasis’ countersuit, filed by lawyers at Yetter Coleman and Jefferson Cano, “effective risk management strategies were available to CPS in the hours, days, weeks, months and years” before the winter storm, which caused record freezing temperatures across Texas and left more than 4 million households without power. But instead, CPS “passed on the opportunity to make less costly gas purchases only to end up paying higher prices later.
“Now in the aftermath, CPS is pointing fingers at everyone but itself,” the countersuit says. “For weeks, it has been lobbying the state legislature to pass a ‘price-gouging’ bill that would lessen the charges CPS agreed to pay to third parties for natural gas, like defendants. That effort has gone nowhere, so CPS has turned to filing lawsuits. … Tellingly, CPS’ lawsuits never deny that it signed valid contracts with the suppliers, it knew market prices ahead of time, and it knowingly ordered, used, and benefitted from gas delivered at those known prices.”
The same day CPS filed its lawsuit against the Energy Transfer companies, it also obtained an ex parte temporary restraining order in San Antonio District Judge Peter Sakai’s court that prohibited the defendants from declaring CPS in default under their natural gas sale contracts or taking any action against CPS for its non-payment.
In a separate filing on Monday, HPL and Oasis stated the March 19 TRO is void because, as a matter of law, it does not include an expiration date and it fails to elaborate how CPS would be “irreparably injured” without obtaining a TRO.
The companies’ counterclaims include breach of contract and fraudulent inducement. The defendants’ lawyers include Paul Yetter, Bryce Callahan and Robert Woods of Yetter Coleman and Lamont Jefferson and Emma Cano of Jefferson Cano.
CPS’ lawyers are David Shank and Lauren Ditty of Scott Douglass & McConnico.
Editor’s Note: The Texas Lawbook seeks to track all of the winter storm litigation unfolding in Texas. If you are involved in such litigation and you feel so inclined as to inform us, please email Natalie Posgate at natalie.posgate@texaslawbook.net