Insurers sue Texas electric grid operator, utilities over winter storm
Posted On: Jan. 6, 2022 1:16 PM CST
More than 100 insurers have filed suit against Texas’ electric grid operator and dozens of utilities in state court seeking compensation for losses they incurred as a result of the loss of power stemming from a February 2021 storm that affected more than 4.5 million households.
The lawsuit, which was filed in state court in Austin last week, charges that Austin-based Electric Reliability Council of Texas Inc., which was the sole manager and independent system operator of the electric power grid, and the power generating companies that supply ERCOT system’s electrical energy, were aware of the potential risk, but failed to take any action.
The lawsuit says homes and businesses throughout ERCOT’s system suffered damage from burst water pipes and low water pressure as a result of Winter Storm Uri, which began Feb. 15, and that at least 57 people died “in connection with the extreme weather and resulting blackouts.”
The lawsuit says although ERCOT and the power suppliers could have been prepared for the storm, they failed to adequately do so, and that ERCOT’s own issued projections for the 2020-21 winter season anticipated the state “would be thrown into the highest state of emergency” if an extreme weather event occurred.
The 84-page lawsuit charges the defendants with negligence and seeks unspecified compensation for payments the insurers have made to their insureds because of the storm.
ERCOT said in a statement it does not comment on pending litigation.
A spokesman for the Austin-based Insurance Council of Texas, a trade organization that is not a party in the litigation, said the lawsuit “is basically part of the subrogation process,” with insurers seeking to recoup the losses they incurred, and is similar to litigation that has been filed in California and elsewhere.
In 2019, California power producer PG&E Corp. said it had reached an $11 billion settlement with entities representing about 85% of insurance subrogation claims relating to 2017 and 2018 wildfires.