CPS Energy spent part of Wednesday dealing with litigation both against it and filed by it in the wake of Winter Storm Uri.
In a statement, CEO Paula Gold-Williams accused Enterprise Products Partners, which has sued the municipally owned utility for nonpayment, of predatory price gouging, claiming the Houston-based oil and gas supplier inflated its natural gas prices by as much as 12,000% during the winter storm, which caused massive power outages across the state in mid-February.
Just hours later, CPS Energy announced it was successful in defeating two key motions brought by the Electric Reliability Council of Texas (ERCOT) in CPS Energy’s case against the state electric grid operator.
Enterprise filed its lawsuit in April, alleging CPS Energy failed to pay nearly $100 million for natural gas delivered during the storm. According to the suit, which was filed in a state court in Harris County, CPS Energy currently owes $99.7 million to Enterprise. CPS Energy paid only $36.5 million toward its February bill, the lawsuit states.
“During the height of Winter Storm Uri, Enterprise held these exorbitant prices in place knowing full well that public utilities, such as CPS Energy, had no choice but to continue to buy,” Gold-Williams said in the statement released Wednesday.
Gold-Williams likened Enterprise’s markup to paying more than $360 for a gallon of milk, claiming CPS Energy already paid Enterprise for natural gas provided during the disaster at 1,095% more than the prevailing price two days before Gov. Greg Abbott’s disaster declaration and 911% more than the price the day after the storm ended.
“Despite having already been paid $36.5 million, a price that is ten times more than the price it charged just days before the declared disaster, Enterprise is suing CPS Energy to collect nearly $100 million more,” Gold-Williams said. “We at CPS Energy will not pass the higher, unlawful part of the charges to our customers only to further fatten Enterprise Products’ bottom line.”
According to a report from Reuters, the storm benefited Enterprise to the tune of about $250 million in the first quarter of 2021.
Enterprise defends its pricing as legitimate and enforceable, Gold-Williams said in her statement, but “Texas law says otherwise,” she added.
“Enterprise’s rhetoric notwithstanding, CPS Energy’s legal positions are based on long-standing legal doctrines, deeply rooted in Texas law: price gouging during a declared disaster is a violation of public policy and the exorbitant prices charged by Enterprise are unenforceable because they are unconscionable,” she said.
An Enterprise spokesman declined when a Reuters reporter called last month requesting comment on the lawsuit.
In March, CPS Energy sued ERCOT, arguing the grid operator is “presiding over one of the largest illegal wealth transfers in the history of Texas.”
In its filing, the utility said ERCOT tallied more than $20 billion in wholesale power charges Feb. 15-19, during Winter Storm Uri. Of that $20 billion, $16 billion came from Feb. 18-19, when ERCOT maintained prices at the market cap of $9,000 per megawatt-hour. Power on the ERCOT grid typically trades at under $50 per megawatt-hour.
These high charges came “even when the scarcity that prompted this charge no longer existed,” the utility’s filing states.
In a separate announcement Wednesday, CPS Energy said it was successful in defeating ERCOT’s requests for a venue change and for dismissal on the grounds that CPS Energy did not have a valid legal basis for the case to be heard in a Texas court.
According to the CPS Energy press release, ERCOT had asked the court to move the case to Travis County, where ERCOT is headquartered. CPS Energy said the court ruled the case will be heard in Bexar County. It said ERCOT also asked the court to dismiss the case and allow the proceedings to take place before the Public Utility Commission of Texas “because ERCOT asserted it has sovereign immunity and thus a court could not rule on the matter.” The court ruled CPS Energy has legal grounds for suing ERCOT for “potentially committing serious violations of Texas Law, Texas statutes, contractual obligations and the Texas State Constitution,” the utility said in the release.
“Judge [Sol] Casseb’s ruling is an important step in San Antonio’s fight to protect our community from illegitimate charges and profiteering during Winter Storm Uri,” Mayor Ron Nirenberg said in the release. “Tuesday’s ruling underscores the strength of CPS Energy’s case against ERCOT, and I look forward to the people of San Antonio having an opportunity to hold ERCOT accountable for its errors during and after the storm.”
In April, CPS Energy obtained a temporary restraining order preventing ERCOT from “taking posted collateral to cover the charges that other market participants have not paid,” the utility said. “A city-owned utility cannot be asked to unlawfully extend its credit to help settle the debts of other entities, especially in cases where there is no chance of being repaid,” it said.
In the meantime, CPS Energy is looking ahead at how to recover from financial losses taken during the coronavirus pandemic and as the utility continues to grow. CPS Energy is currently considering a rate increase, which could go into effect as soon as this fall. Whether CPS Energy will charge its customers for the $1 billion in power it bought from ERCOT during the storm remains to be seen.
CPS Energy’s newly formed Rate Advisory Committee will have its first meeting Thursday.
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