Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Tuesday, June 18, 2024 | Back issues
Courthouse News Service Courthouse News Service

San Antonio Utility Sues Texas Grid Operator Over High Prices During Winter Storm

CPS Energy accuses the Electric Reliability Council of Texas of overcharging billions of dollars during last month's winter storm.

CPS Energy accuses the Electric Reliability Council of Texas of overcharging billions of dollars during last month's winter storm.

People walk through the snow as they pass the Alamo, Thursday, Feb. 18, 2021, in San Antonio. Snow, ice and sub-freezing weather continue to wreak havoc on the state's power grid and utilities. (AP Photo/Eric Gay)

SAN ANTONIO (CN) — San Antonio’s energy utility accused the state electric grid operator of conducting “one of the largest illegal wealth transfers in the history of Texas” in a state court lawsuit Friday.

“CPS Energy has taken an important legal action to protect its customers from excessive charges related to last month’s winter storm event,” San Antonio Mayor Ron Nirenberg said at a press conference Friday. “The injustice of imposing an erroneous, excessive and unlawful cost on San Antonians who suffered during the storm cannot be allowed.”

CPS Energy filed suit in Bexar County District Court, accusing the Electric Reliability Council of Texas and its officials of negligence, breach of contract and violations of the Texas Constitution.

Bill Magness, President and CEO of the Electric Reliability Council of Texas (ERCOT), testifies as the Committees on State Affairs and Energy Resources hold a joint public hearing to consider the factors that led to statewide electrical blackouts, Thursday, Feb. 25, 2021, in Austin, Texas. The hearings were the first in Texas since a blackout that was one of the worst in U.S. history, leaving more than 4 million customers without power and heat in subfreezing temperatures. (AP Photo/Eric Gay)

According to the lawsuit, ERCOT overcharged Texans by $16 billion between Feb. 15 and 19 during Winter Storm Uri, which plunged the Lone Star State into freezing temperatures, devastated energy infrastructure and left many without water, heat and electricity — hospitalizing and killing dozens.

The winter storm has prompted numerous lawsuits from across the state over the astronomical energy bills and tragic and unnecessary deaths that followed in the freeze’s wake.

The complaint, filed by Glenn Ballard Jr. of the international law firm Dentons, claims that ERCOT erred in not lowering the price of energy from its $9,000 per megawatt hour maximum for at least two days. CPS Energy claims that ERCOT owes the San Antonio utility at least $18 million.

“The system is designed to accept some volatility, but in the end all of the volatility goes to customers,” said Paula Gold-Williams, CEO of CPS Energy, at the press conference.

Gold-Williams cited Texans’ monthly utility bills that totaled more than $10,000 in other areas of Texas.

“We incurred, in five days, about $5 billion in incremental costs. We don’t spend that much money in a year,” Gold-Williams said. “And in the end, it is tremendous for us to have our customers go through a reliability criss, and then give them a bill which never should have gotten that high during a declared disaster.”

An ERCOT representative said the grid operator has “no comment at this time" on the lawsuit.

Nirenberg says the city supports CPS Energy’s lawsuit.

“CPS Energy and the city of San Antonio are collectively fighting to ensure that San Antonians get treated fairly. Nothing less is acceptable. ERCOT’s poor performance and preventable mistakes leave CPS Energy little choice,” he said. “ERCOT oversaw the complete and catastrophic failure of the Texas energy market. Six members of ERCOT’s board have since resigned and the CEO was terminated. Clearly they aren’t gone because of a job well done.”

The mayor did not mince words as he continued to blast the grid operator.

“ERCOT could have proactively acted to ease the pain, and they didn’t. They botched the job and created a continuing crisis for millions of Texans who were forced to endure freezing temperatures without power for extended periods of time. State regulators failed miserably to live up to their responsibilities and now they want you to pay the tab,” Nirenberg said.

He added, “Overcharging San Antonio residents because of ERCOT's disastrous mismanagement of the state’s energy grid is not acceptable, and CPS energy has acted to make sure ERCOT doesn’t pass the buck to our community. San Antonians must not be saddled with additional harm.”

CPS Energy named ERCOT, its recently terminated CEO Bill Magness, and every member of its board of directors as defendants in the suit.

The utility asks the court to order that CPS Energy does not need to pay the “overcharge and excessive prices” and bar ERCOT from retaliating against the energy company, for instance by restricting the city’s access to the electric market.

Follow @cucumbermarg
Categories / Energy, Government, Regional

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.