ERCOT claims it can't be sued

Even as lawsuits emerge after Texas' winter storm, the power grid operator says it wouldn't benefit anyone to sue them.

Video Transcript

KEATON FOX: Hey, everyone. I'm Keaton Fox, the data analyst here for ABC13. We've talked a lot about ERCOT, sort of what it is and what is going on at the moment. We have this thing called sovereign immunity. That is what ERCOT is claiming they have here.

First of all, they claim that they're a quasi-governmental agency even though they're private, which means that because they're a government agency, they are not susceptible to lawsuits holding them accountable for much of anything. They are not funded by taxpayers. They are funded by all of the individual members of ERCOT that is managed there, of course, some of the 700 power plants across the area.

They're a nonprofit, a 501(C)4. Interesting note on this in particular. You may be familiar with 501(C)3s. That's a nonprofit. A lot of churches are 501(C)3s. 501(C)4s flaws are things typically like homeowners associations, volunteer firefighting associations. ERCOT claims that it is a 501(C)4.

It is the only grid operator in the entire country that has these sorts of protections. But what timing-- in a case that was filed several years ago, Panda Power-- Panda is a company in Dallas-- they sued ERCOT few years ago saying, hang on, you have not served us well. We want some money from you.

It has moved all the way through the courts, all the way to the Texas Supreme Court. All along ERCOT saying, you can't sue us. We have sovereign immunity. That case has been heard. It's in front of the Texas Supreme Court right now, and they will ultimately decide by June.

As we have mentioned many, many times, ERCOT is one of its own grids across the entire country. You have the Western grid. You have the Eastern grid. And then you've got Texas. And Texas is on its own little island down here all by itself.

There's a couple of reasons for this. Number one, there's no federal oversight. They didn't want federal oversight. This is all very, very intentional. However, some of the cons here is that we have a lack of strict regulation on what's going on.

For example, there was no mandate for power plants to winterize their plants because there was no regulation there. It was a recommendation. And obviously, we have the inability to rely on backups. We couldn't tap into the western grid. We couldn't tap into the eastern grid either.

However, proponents of this system will say, well, hang on a second. We're glad that we don't have any federal oversight because they have too many rules. It's too expensive, too many regulations. We can set our own prices here in Texas and manage the system the way we want to here.

We can fuel innovation by setting those own prices. And we're insulated from the problems with other grids. If anywhere in that eastern or western grid had some sort of a major problem-- say the wildfires out in Western California, that could be affecting the entire power grid if that was to go down.

The reason that we started this was a snowstorm in the Northeast in the late 80s. That's what got us into our own in the first place. That could have taken down all of these states if there was some sort of major problem. So Texas says, hang on, we're glad that we're on our own little system. We like it.

Of course, like I mentioned, it'll be sometime before June before we hear whether or not ERCOT can ultimately be sued and whether that sovereign immunity claim will hold up. We'll keep you posted. For ABC13, I'm Keaton Fox, Eyewitness News.