The tangled contractual dispute involves three distinct entities and their actions during the grid crisis occasioned by Winter Storm Uri in 2021
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Spiking wholesale energy prices during the 2021 winter storm figured into the Supreme Court case.
In a sign that fallout from Winter Storm Uri five years ago continues roiling the Texas business world, a power scheduler and commercial electricity supplier found themselves in court this month still fighting over a multi-million-dollar charge from the grid crisis.
A trial in the case — “Engie Resources LLC et al. v. Viridity Energy Solutions” — is tentatively is scheduled for May. The Texas Business Court, a trial court specializing in complicated corporate matters, conducted a hearing on March 20.
The Tangled Details
The tangled contractual dispute involves three distinct entities and their actions during the 2021 grid crisis. The three entities are oil and gas producer BASA Resources, power scheduler Viridity Energy Solutions, and commercial electricity supplier ENGIE Resources.
Viridity in 2021 worked as an intermediary between ERCOT and BASA, according to a report in Law360, an online legal journal. In its role, Viridity helped BASA profit as a “load resource”; i.e., a large electricity consumer with the ability to reduce its electricity consumption in exchange for financial compensation when called upon by ERCOT. BASA also had a bilateral contract under which it provided load resources to ENGIE so that that company could meet its own ERCOT obligations.
But problems arose during Winter Storm Uri in 2021 when ENGIE failed to meet its obligations, and the Texas grid operator assessed approximately $50 million in charges against the company, according to Law360. In litigation, ENGIE has since pointed the finger at Viridity. It was a motion by Viridity to have that case thrown out that was heard by the Texas Business Court on March 20.
Under Viridity’s telling, the BASA facility was already offline during the period in question and, as such, the power scheduler was under no contractual obligation to make certain load resource notifications to ERCOT. “We’re shut down already. How can I tell ERCOT I can’t shut down anymore? I have nothing to shut down,” company counsel Andrew W. Zeve said during the summary judgement hearing.
But ENGIE’s counsel, E. F. Mano DeAyala, said there had been no instructions to Viridity to halt submissions. Neither had a force majeure — that is, a contractual clause freeing parties from legal obligations due to an extraordinary event — been declared, said DeAyala.
“There was a little revisionist history going on in that presentation,” DeAyala told the court, according to reporting in Law360
The History
Law360 traces the dispute to a year after the storm, when ENGIE and Viridity jointly filed regulatory complaints with the Public Utility Commission disputing the ERCOT charges and arguing that the grid operator violated its own protocols.
The PUC eventually decided in ERCOT’s favor but declined to rule on the merits of the contractual disputes, according to Law360. “While Engie remained responsible for the roughly $50 million charge, BASA settled some $20 million with it, and they both sued Viridity last year, seeking the full amount back,” Law360 reported.
The case is Engie Resources LLC et al. v. Viridity Energy Solutions Inc., case number 25-BC11B-0021, in the Eleventh Division of the Texas Business Court.