In ERCOT, the Buck Stops Nowhere

Two years after Winter Storm Uri caused blackouts and hundreds of deaths across Texas, it is becoming harder to figure out whether anyone will truly be held accountable for the near-collapse of the power grid—and whether anyone will fix the problems before the next crisis.

Earlier this month, the Texas Supreme Court ruled that ERCOT cannot be sued.  The court held that because ERCOT is an arm of state government, the doctrine of “sovereign immunity”—originally conjured up by English courts to protect the King—prevents Texans from bringing ERCOT to court for money damages or injuries from the market’s failures during Storm Uri. Even the relatives of Texans who died due to the mismanagement of the grid have no remedy against ERCOT in court.

Outside of Texas, ratepayers in the multistate markets are at least able to sue their RTO/ISOs, which are structured as nonprofits. However, those markets have a different sovereignty problem: the states have surrendered part of their traditional powers over electric utilities by putting the market regulators in charge of the grid. State legislatures have no power over RTO/ISO decision making, so voters have no input into how these markets are run. Moreover, the market operators lack authority to require the states to build transmission and generation. This creates a collective action problem, where one state may refuse to build resources that primarily benefit another. It also creates an accountability problem, with no single regulator or utility having to bear the full weight of responsibility for keeping the lights on. This can be seen in PJM and MISO, where events during Winter Storm Elliot are being studied by the markets, various state commissions, and FERC, each of which has only part of the authority needed to solve the problems.

Ratepayers deserve a straightforward answer to the question of who is responsible for ensuring there are adequate resources to ensure they have reliable power. But under industry restructuring and today’s market constructs, this is no longer possible. ERCOT’s victory in court is a stark example of this disconnect, with the grid operator asserting a royal power to avoid direct accountability for grid issues that affect ERCOT’s ratepayer subjects. While Texans wait for answers about how to avoid the next Storm Uri, and consumers across the Midwest and Southeast wonder whether next winter will bring another Storm Elliot, they should ask whether they can safely rely on the RTO/ISO status quo of grid operation without representation.