This article has been updated.

CPS Energy sued the Texas electrical grid operator Friday in a Bexar County court, arguing that the Electric Reliability Council of Texas (ERCOT) is “presiding over one of the largest illegal wealth transfers in the history of Texas.”

In a filing Friday, San Antonio’s municipally owned electric and gas utility said ERCOT tallied more than $20 billion in wholesale power charges from Feb. 15-19, when a winter storm battered Texas and crippled the state’s natural gas and power systems.

Of that $20 billion, $16 billion in charges come from a period between 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.

At a joint press conference Friday with Mayor Ron Nirenberg and other City officials, Gold-Williams took aim at the very structure of the Texas marketplace, which is supposed to offer high prices as an incentive for power producers to be ready to supply the grid in extreme weather. However, lawmakers failed to institute any significant power plant weatherization requirements following similar winter storm blackouts in 2011.

“The system is designed to accept some volatility” in pricing, Gold-Williams said. “It was never designed to have people pay extreme prices for day after day after day.”

In addition to ERCOT itself, the lawsuit also names former ERCOT CEO Bill Magness, who was fired earlier this month, and several top staffers. It also names Arthur D’Andrea, chair of the Public Utility Commission of Texas, which regulates the power industry. Attorneys with the law firms Dentons U.S. and Chasnoff, Mungia, Valkenaar, Pepping, and Stribling are serving as outside counsel in the lawsuit, filed in 285th State District Court.

Spokespersons for ERCOT and the PUC spokeswoman declined to comment on the suit.

Earlier this month, CPS Energy officials warned that natural gas and power prices caused CPS Energy to rack up $1 billion in natural gas and power charges. Gold-Williams initially revealed estimates of $800 million in natural gas charges and $200 million for wholesale electricity, but she acknowledged Friday that the “numbers keep changing.”

“The natural gas number maxed out initially at about $840 million,” Gold-Williams said. “But about $140 million [in natural gas] never got delivered, so we never paid for the natural gas that we didn’t get. So we’re now below $700 million on the natural gas side.”

The lawsuit only deals with the power side, where initial estimates were around $200 million, but that’s “now up to $310 million” because of other utilities and power companies not paying their full share of debts in the ERCOT market, Gold-Williams said.

“Other entities similarly situated to CPS Energy have or will receive similar invoices,” the filing states. “These extreme confiscatory prices have caused many providers within the ERCOT system to become insolvent. … Predictions are that as many as 22 market participants could fail.”

(from left) CPS Energy President and CEO Paula Gold-Williams addresses the media following the public utility filing a lawsuit against the Electric Reliability Council of Texas (ERCOT) as Mayor Ron Nirenberg and Lauren Valkenaar, outside counsel for CPS Energy also attend. Credit: Brendan Gibbons / San Antonio Report

ERCOT is currently short $2.5 billion in payments from struggling utilities and power companies, with at least $18 million owed to CPS Energy for periods during the storm when it was able to produce more power than its customers consumed, the lawsuit alleges.

Whatever costs the utility incurs for the storm will inevitably add to CPS Energy customers’ bills. It’s not yet clear how much those bills will increase and when.

CPS Energy’s role in the Texas market is as both a buyer and seller of wholesale power. It uses its fleet of power plants and wind and solar generators to play the market in a way that typically earns revenue for its owner, the City, and keeps rates relatively low compared to other Texas cities.

But during the storm, many of CPS Energy’s power plants were offline or generating less electricity than usual. Gold-Williams has attributed this to statewide natural gas shortages and mechanical failures related to the cold weather.

Since the storm, CPS Energy has avoided passing on high fuel and power costs to customers via the method it would use under normal circumstances. Typically, the costs of gas, coal, nuclear fuel, and wholesale power are included in “adjustment factors” tacked on to customers’ bills.

Normally, these adjustment factors go up and down each month in response to fluctuating fuel and electricity costs. CPS Energy has kept these levels the same as they were ahead of the storm, according to this chart.

Any increases to the base rate that CPS Energy charges customers would have to be approved by City Council. The last time this happened was in 2013, when council members approved a 4.25% rate increase that took effect the following year.

CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.

Brendan Gibbons

Brendan Gibbons is the San Antonio Report's environment and energy reporter.