March 19, 2023
On March 17, 2023, the Texas Court of Appeals for the Third District issued an opinion reversing two winter storm Uri orders by the Public Utility Commission of Texas (PUCT) that had raised power prices in ERCOT to $9,000/MWh. ERCOT, the Electric Reliability Council of Texas, manages the electric grid for most, but not all, of Texas and serves approximately 26 million customers.
The decision by the Court of Appeals in Luminant Energy Company LLC v. Public Utility Commission of Texas, No. 03-21-00098-CV, has the potential to affect certain transactions made under the PUCT’s orders. The Court of Appeals not only reversed the PUCT’s orders but remanded them for further proceedings. Should the Court of Appeals’ opinion be upheld, it is unclear how the PUCT will resolve the pricing issues, but it would likely need to hold proceedings to address them. The opinion also raised questions about the authority of the PUCT to issue price caps for Texas’ energy market.
Next steps will likely include a request for hearing en banc of the Court of Appeals’ opinion or a petition for review to the Texas Supreme Court. If the Texas Supreme Court upholds the lower court’s opinion, a process before the PUCT will need to take place.
On a parallel path, the Texas Legislature is in session and alternative outcomes to the Court of Appeals’ opinion could be pursued in the halls of the Texas Capitol.
The energy lawyers and professionals of McGuireWoods LLP and McGuireWoods Consulting, particularly our Austin, Houston and Dallas offices, are monitoring the situation.