Texas Supreme Court rules ERCOT can't be sued over 2021 winter storm

A court ruling is expected to squash current and future lawsuits against the state’s power grid operator, ERCOT.

In a nearly split decision, the Texas Supreme Court ruled Friday that the non-profit ERCOT qualifies as a government entity and is shielded from lawsuits.

Many people didn’t know what ERCOT was until the deadly 2021 winter storm, and courts have gone back and forth whether it qualified for some key legal protections more than two years since much of the state lost power during the winter storm that swept the state.

There are legal battles over the lives affected and money lost wage on, but after hearing arguments in January on two cases filed by businesses against ERCOT, the all-Republican Texas Supreme Court Ruled 5-4 that ERCOT is a governmental unit and it cannot be sued.

"So there are a whole lot of lawsuits right now against ERCOT, not just related to the winter storm, but to a whole heck of a lot of other things that are going away based on today’s Texas Supreme Court ruling," explained Chad Ruback, who is an attorney not involved in the cases.

He noted the protection known as "sovereign immunity" that shields government agencies is used to protect tax dollars and let the state focus on governing.

"If government could be sued every time government did something wrong, allegedly, the government would be spending a huge amount of money on legal fees, even for frivolous lawsuits. So sovereign immunity does keep our tax rates lower," he said. "Sometimes, the government really messes up and people are harmed, and with sovereign immunity in place, the government is immune from liability."


Texas Supreme Court will decide whether ERCOT should be immune from lawsuits sparked by deadly winter storm

Many people and insurers sued the Electric Reliability Council of Texas after the 2021 freeze. The nonprofit says it shouldn’t be liable. The state Supreme Court has a chance to weigh in.

ERCOT is a non-profit corporation, but it operates as the state’s power grid manager under the authority of the Public Utility Commission.

The governor appoints the PUC’s commissioners, and the commission chair sits on ERCOT’s board.

In a ruling for the majority Friday, Chief Justice Nathan Hecht wrote: "…this does not leave ERCOT unaccountable. It simply holds that the courts are not the proper avenue for redress. ERCOT is accountable to the state. Its shortfalls are being addressed by the Legislature, which is accountable to the people through the political process."

An attorney representing those suing ERCOT said in a statement: "We are disappointed but not surprised that The Texas Supreme Court continues to prioritize the interests of corporations over the safety of its citizens. Texans deserve better from their elected officials and justice will not be served until the Justices are voted out of office."

Last year, a Dallas Appeals Court ruled 12-1 ERCOT could not claim sovereign immunity.

Ruback said division like this isn’t common on the all-Republican Supreme Court.

"This is definitely a situation in which intelligent people with great resources to research are going to disagree and did disagree," he said.

The state legislature could issue a waiver, essentially allowing lawsuits against ERCOT to move forward, but this early, there’s no indications as to whether there’s any appetite for that.