The initial case was brought in February 2022 by the liquidating trust for Entrust Energy, which went bankrupt after energy prices spiked during the 2021 winter storm.
________________________________________________
Spiking wholesale energy prices during the 2021 winter storm figured into the court case.
Litigation alleging that improper actions by ERCOT during Winter Storm Uri contributed to an electric company’s bankruptcy have been dismissed by a U.S. court. The trustee for the retail electric provider shall receive no court-ordered damages, the judge ruled on March 11.
The initial case was brought in February 2022 by the liquidating trust for Entrust Energy, which went bankrupt after energy prices spiked during the 2021 winter storm. The trust alleged that by transferring 90,000 of its Texas customers to a Provider of Last Resort, ERCOT had engaged in an improper financial “taking.”
DECEMBER RULING
But ERCOT typically transfers customers to the POLR when their electric provider goes bankrupt, and in December U.S. Bankruptcy Judge Marvin Isgur rejected the trustee’s takings claim. That left only Entrust’s separate claims that ERCOT was grossly negligent in preparing for the storm and negligent in its actions during the storm and afterwards.
The judge In December also converted ERCOT’s motion to dismiss the negligence claim into a motion for summary judgment. Now, in the March 11 order, he has ruled again against the retail electric provider trustee, finding that it should receive no damages and that ERCOT is entitled to “all costs incurred in connection with this adversary proceeding.” The trustee initially had sought $296 million.
IMMUNITY CLAIMS
ERCOT has consistently argued that it is immune from liability and that it is therefore entitled to summary judgment. However, the new decision doesn’t turn upon whether ERCOT has sovereign legal immunity under the U.S. Constitution, but rather immunity under Texas law. “The Trustee’s position confuses the concepts of constitutional sovereign immunity from suit in federal court with state-law immunity from liability under Texas law,” the judge stated.
Judge Isgur explained that while Texas lawmakers have created a limited waiver of sovereign immunity, these claims against ERCOT do not fall under that state law.
The case is styled Case 22-03018, Anna Phillips, as Trustee v. Electric Reliability Council of Texas, Inc.