During the winter storm in February 2021, the Texas Public Utility Commission (PUC) issued two emergency orders that raised the price of electricity “to reflect the scarcity of supply, thereby incentivizing generators capable of adding supply to do so and large industrial users to reduce their demand.”

A power company, claiming PUC’s orders caused it to lose a billion dollars, sued to have the orders declared invalid.

Orders Were Competition Rules
PUC argued the Supreme Court of Texas (SCOTX) lacked jurisdiction because the Texas Public Utility Regulatory Act (PURA) only allows challenges to “competition rules,” which these were not. SCOTX disagreed, concluding it had jurisdiction because 1) the orders applied to all market participants and 2) orders regulating prices affect competition.

PUC Had Authority
After a detailed analysis, SCOTX held PURA gave PUC authority to issue the orders. While PURA encourages the market to determine prices, it “acknowledges that the goal of prices set by competition may, in some circumstances, have to yield.” Moreover, “Deciding when those circumstances are present—and how to respond—is [PURA’s] job, not the judiciary’s.”

SCOTX also said it was not the role of the courts to determine if the orders accomplished their stated goal.

Substantial Compliance with Procedures
Texas law allows emergency rules when the agency makes a finding of “imminent peril.” SCOTX held that the orders’ preamble statements of “statewide disaster declaration” and “highest state of emergency” substantially complied. PUC failed to file the orders for publication as rules in the Texas Register; SCOTX held that PUC substantially complied by posting them on PUC’s website and confirming that a link to the orders was in an email sent to market participants.

To see SCOTX’s opinion 230231.pdf (txcourts.gov)