Lawsuits over outages just starting
Experts say biggest cases are likely to involve energy firms, contracts
Freezing temperatures and power outages ended in Texas only a few days ago, but the impact on human life and property caused by the winter storm will be documented in a blizzard of civil litigation.
Nearly a dozen lawsuits have been filed over the past few days — including two wrongful death complaints in Houston and a class action by Houston area residents — against the Electric Reliability Council of Texas and a handful of large power suppliers. Lawyers involved in those cases predict hundreds more cases seeking billions of dollars in damages will be lodged over the next couple of months.
Still, the big-money cases may be yet to come.
Lawyers specializing in energy litigation said a handful of retail power suppliers, distributors and natural gas midstream companies are vulnerable to liability and damages. Four companies — CenterPoint Energy, American Electric Power, Entergy Texas and Griddy — have already been sued in separate lawsuits.
While the initial lawsuits — and there will be hundreds of them — against the energy companies filed by individuals will get the most public attention, legal experts say that the biggest cases — those pitting energy companies against each other over contract breaches — are several months away from being lodged.
Multiple energy industry lawyers said power generating companies, such as Vistra Corp. and NRG Energy, have clear legal and financial claims against operators of the natural gas pipelines who failed to provide their gas-powered plants with the fuel they needed to produce electricity.
“Natural gas producers and pipeline operators are in the bull’seye — all for different reasons,” said a corporate energy lawyer who spoke on condition of not being identified. “They had contracts to deliver gas and the plaintiffs’ lawyers are going to say those contracts were broken.”
To underscore the potential breadth of the legal disputes involved, six corporate law firms in Texas declined to be interviewed because they were hired by energy companies during the past three days in anticipation of future litigation. Four prominent energy lawyers spoke on condition they not be identified because the power and gas companies they represent declined to give them permission to make public comments.
Meantime, individual complaints are mounting.
“We are being inundated by owners of small businesses, executives at large businesses and homeowners who clearly have been damaged by some in the energy industry who ignored warnings and put profits ahead of safety,” said San Antonio trial lawyer Mikal Watts.
“Business claims fall into two categories — those businesses that have been physically damaged by pipe eruptions and those who are losing money because of business interruption,” Watts said.
While nearly all the lawsuits filed thus far name ERCOT as a defendant, legal experts said that as a quasigovernment-operated nonprofit corporation the power grid operator has in the past successfully argued that it has sovereign immunity from these kinds of civil lawsuits.
That creates a hurdle for plaintiffs, according to lawyers, who are pointing to a 2011 report by the Federal Energy Regulatory Commission that slammed the Texas Public Utility Commission,
which supervises ERCOT, for not “instituting cold weather preparedness” measures regarding the power grid.
The report was cited by lawyers for the family of former Negro League baseball player Doyle Austin. They filed a wrongful death complaint in Harris County District Court Monday against ERCOT and CenterPoint after the 94-year-old’s death last week was attributed to “hypothermia as a direct result
of the power outage.” CenterPoint declined comment.
Another case citing the report has been brought against Entergy and ERCOT alleging responsibility in the death of an 11-year-old boy from Conroe.
Watts, the trial attorney, said he expected hundreds of additional lawsuits will be filed by homeowners and businesses against their insurance carriers over their coverage — or lack thereof.
“The big question is whether the insurance companies will be forced to subsidize the negligence of the energy companies or will the insurance companies bring the energy companies into the litigation as defendants,” Watts said. “The Texas courts are going to be busy with this litigation for a long time.”