The controversial dispute between the Public Utility Commission of Texas and Luminant Energy Company began oral arguments before the Texas Supreme Court on Tuesday.
An appellate court previously ruled against the Public Utility Commission of Texas (PUCT) after determining that the utility had overreached its authority by setting electricity rates at the highest level possible — $9,000 per megawatt-hour — during Winter Storm Uri in 2021. As a result of those rates, retail electricity providers were overcharged by $16 billion.
The Texas Supreme Court previously held that ERCOT, a nonprofit that operates Texas’s electrical grid, handling about 90% of the state’s electric load, could not be held liable for the losses, as previously reported by The Dallas Express. The decision puts responsibility on the PUCT, which “regulates the state’s electric, telecommunication, and water and sewer utilities, implements respective legislation, and provides consumer assistance in resolving complaints.”
At issue before the Texas Supreme Court is whether it was legal for state energy regulators to raise the price of electricity during the blackouts. The court’s decision could impact other cases in which providers and customers are challenging the decision to raise rates during the worst blackout in state history.
The storm — while not the worst on record in the state — resulted in the deaths of 229 Texans and 15 from other states. More than 65% of the deaths were the result of exposure to the harsh effects of the storm.
A major question for the court to answer should they side with the appellate court is how to assess and distribute damages nearly three years after the devastating storm.
“You would have to figure out who paid what to whom and sort of undo the daisy chain of transactions and sales as you’re repricing,” said Alison Silverstein, reported The Texas Tribune.
Silverstein, who previously served as a senior advisor for both the PUC and the Federal Energy Regulatory Commission, told The Texas Tribune that if the appellate court decision stands, it could create a “gigantic mess.”
Texas legislators have also worked to identify ways to prevent the types of damages that occurred during the storm from being repeated and are looking for opportunities to use state funds to offset the losses suffered by numerous energy companies as a result of the high electricity rates. These efforts include expanding natural gas distribution and issuing payments to consumers to offset high bills.
