Tanzina Vega: Last Tuesday, 11-year-old Cristian Pavon Pineda of Conroe, Texas, went to bed and never woke up. As a snow and ice storm ripped through the state, millions of Texas residents, including the Pineda family, were left without power and running water, forced to survive in freezing temperatures. On Tuesday night, Cristian's family bundled together in their mobile home. By Wednesday morning, Christian was unresponsive. According to the Houston Chronicle, Cristian's mother said she suspects her 11-year-old son died from hypothermia. He had arrived in Texas from Honduras just two years ago.
Now the Pineda family has filed a $100 million lawsuit against the Electric Reliability Council of Texas, also known as ERCOT. The Pineda family is not alone, a handful of other lawsuits claiming the utility was not prepared for the storm have also been filed. Nationally, the Texas power grid stands out because it's the only electric utility in the country that is not federally regulated. The Texas Supreme Court is reviewing whether ERCOT is exempt from this litigation through sovereign immunity, a legal precedent that exempts government bodies from certain legal claims.
I'm Tanzina Vega and breaking down the legal future of the Texas power utility is where we start today on the Takeaway. Dominic Anthony Walsh is a Report for America core member, reporting on environmental issues for Texas Public Radio. Dominic, thanks for joining us.
Dominic Anthony Walsh: Thanks for having me.
Tanzina: What exactly does ERCOT do in the state of Texas? Do they distribute electricity? Do they just help manage the distribution? Tell us their role.
Dominic: The full title is the Electric Reliability Council Of Texas. For short, people call them ERCOT. Last week during the press conferences, they were breaking down what their role was, trying to help people understand. They described themselves as the air traffic controller or the traffic cop for the electric grid. They don't own any of the pieces of the grid, they merely try to manage the flow from piece to piece. Their role in the blackouts was that on Sunday night, just over a week ago at this point, several power generating units tripped offline, most of them owned by private companies.
As those units tripped offline, ERCOT saw demand for electricity surging, it saw supply dropping, very dangerous for the grid. That could cause a huge crash that would take a long time to repair. In that instance, ERCOT's role was to tell utility companies in various cities and regions, "Hey, we need you to do rolling blackouts now." That's what ERCOT does. It really just manages the flow of electricity. It's not a regulator, it doesn't have enforcement power. It merely just tries to make the grid work well.
Tanzina: Dominic, why are they the center of this lawsuit from the Pineda family and also a handful of other lawsuits that we're starting to hear about?
Dominic: They've been the big name since this all came about because they were the ones who made the call that these rolling outages need to happen. It's a good question as to whether or not they're going to be the only one held responsible in the courts and in the aftermath in terms of legislation. In the lawsuit you mentioned, there's also, I believe the private utility is included in some of the other lawsuits, the various private utilities from different regions are included.
It's definitely not going to just be ERCOT most likely. You have a mix of players in this equation from the private utilities to the public utility commission which oversees ERCOT, which actually is a state regulatory agency because ERCOT is actually a 501(c)4. You have a lot of--
Tanzina: What's a 501(c)4 Dominic, tell us.
Dominic: 501(c)4 is a non-profit and basically ERCOT was made that way by the state of Texas. It still does certain governmental actions, but it's also kind of a private entity. That's actually one of the big questions that now faces the Texas Supreme Court from preexisting litigation, which I'm sure we'll get to in a moment, but this question of can ERCOT even be sued?
Tanzina: That's really the question. There's this idea of sovereign immunity, which would make ERCOT immune from these types of lawsuits. The Texas Supreme court is supposed to decide that relatively soon, right?
Dominic: Yes, and that decision was going to happen regardless of these outages. This actually goes back to a lawsuit that's been around for a few years at this point. A utility company in, I believe, Dallas, called Panda Utility, private company- or rather they're called Panda Power, my bad. Basically what their lawsuit centers around is demand forecast from ERCOT. ERCOT says by this year, we expect to have this much demand, and so Panda Power built a certain number of generators and then they say they took losses on that because ERCOT's projection was wrong.
It's been working its way through the courts and it's now before the Texas Supreme court. One of the questions that needs to be answered in this particular lawsuit is can ERCOT be sued? Does it have sovereign immunity? The Texas Supreme Court will continue to meet until June, at which point it'll go into recess. We're expecting a decision before then, but whatever that decision is, will have ripple effects for these other lawsuits. There's always caveats, there's always permutations to these various legal technicalities so they might still be able to be sued under certain allegations, even if they do have sovereign immunity, but it'll definitely make it much harder. There will be a much higher bar to meet for those lawsuits to proceed.
Tanzina: Dominic, what do we know about the 11-year-old Cristian Pavon Pineda of Conroe, Texas who died last week because of what his family says was hypothermia and not having power. What do we know about that case so far?
Dominic: It's still very much in the early stages. Like we just mentioned, it's unclear if it will even be able to proceed, at least against ERCOT. Family is suing for more than $100 million. ERCOT is listed, so is one of the utility companies that did these blackouts. One of the issues here is the nature of the blackouts. ERCOT, what they asked the utilities to do is to make them rolling, which it moves from area to area, people do get power back eventually, even if it's only for 15 minutes every hour or two.
But instead, for many Texans, it was very, very persistent. It lasted for hours just because of the extreme, catastrophic nature of this particular situation. With the number of generators offline, certain companies couldn't safely bring back areas and rotate them. That's one of the issues we're seeing here now, is there's a question: Is ERCOT responsible that these other utility companies couldn't rotate their outages, or are the utilities responsible that they couldn't rotate the outages? That's one of the issues and it's what led a lot of Texans to be in the cold and dark for hours, if not days, without any, even a minute of power.
Tanzina: Dominic, you've talked to attorneys in Texas about the feasibility of some of these lawsuits. We understand so far that ERCOT itself is being determined whether or not it can be sued, or whether it has sovereign immunity. Beyond that, you mentioned that there are other utilities that are also being sued in these lawsuits. What is the likelihood of any of these lawsuits actually coming to fruition at this point?
Dominic: The lawyers I spoke with said those private utility companies, and there's a mix in Texas. Here in San Antonio where I'm at, we have a public utility, you have municipally owned utility. For the unregulated market which touches Houston, Dallas, most of Texas, you're in a market where a lot of companies compete for consumers.
In those cases, the lawyers that I've spoken with tend to agree that those private utility companies are probably going to be the last people standing when it comes to these lawsuits and who could be held responsible, because ERCOT might end up receiving sovereign immunity, the other regulatory agencies already have sovereign immunity, it's established, and these power utilities might be the last one standing.
Just one more point on the feasibility issue. The Texas Supreme Court is not just a judicial entity, it's also a political entity in that there are elections. Every two years, a certain batch of judges on the Supreme Court face elections, so there is a political consideration to be had for these judges in that there have been massive bipartisan calls for ERCOT to be held responsible for this.
People will remember if the Texas Supreme Court does not hold ERCOT responsible or paves the way for them to not be held responsible by giving them
sovereign immunity. In addition to the nitty gritty legal technicalities of the case, there are also political considerations
Tanzina: Speaking of politics, what about Texas Governor Greg Abbott, who seems to pop in and out of conversations here?
Dominic: He has laid the blame for this squarely at the feet of ERCOT. Like we mentioned earlier, ERCOT describe themselves as a traffic control cop, a air traffic controller for the electric grid. They've said, "We can't do anything to force someone to weatherize. We can't fine them. We can't penalize them." But ERCOT is overseen by the Public Utility Commission of Texas, a regulatory agency with a three member board appointed by Abbott. That particular agency actually has power. There's also what's known as the Texas Railroad Commission, which believe it or not, has nothing to do with railroads. They oversee the the natural gas sector. One of the big problems we saw was all these frozen natural gas lines, frozen natural wellheads, and that was responsible for a huge chunk of these outages.
You have these various regulatory agencies that are political in nature. You also have the state legislature, and then you have the governor's office. At the end of the day, some of the people I've spoken with have basically just said, "All that ERCOT is, is just a pawn in this kind of game when it comes to managing the power grid." The Public Utility Commission, the Railroad Commission, the state legislature, and the governor's office are the ones, in some people's eyes, that should have actually made a change to prevent something like this from happening.
Tanzina: Dominic, finally, we've talked a lot about the entities here, but what about the people in Texas? How are they faring right now? Have they largely gotten power back? Are Texans starting to dig out and return to some type of normalcy right now?
Dominic: The majority of the state fortunately does have power back. Water is still an issue. There's still a boil water notice for a lot of Texans. There are still some, especially cooperatives, that are still digging out of this. Last check, there was a couple thousand people in the Hill Country region of Texas who [unintelligible 00:11:44] of an electric cooperative which is just another type of utility. It's different from municipally owned or private, but they were still getting their power back on and still recovering from this.
In the worst cases, this has been over a week long in terms of how long this crisis has lasted for people. Fortunately, the weather is back to typical Texas weather. We're in the 70s again, so not having power right now is less dire than not having power in 5 degree weather.
Tanzina: Dominic Anthony Walsh is a Report for America core member, reporting on environmental issues for Texas Public Radio. Dominic, thanks so much.
Dominic: Thanks so much for having me.
Nancy: This is Nancy, I'm calling from Dallas. We had intermittent power for about three or three and a half days, but never any water problems. I know many people who were not so lucky and had floods and ceilings that fell in, and absolutely no water for several days.
Tanzina: In the wake of this month's winter storm, tens of thousands of insurance claims have already been filed by Texans, and because so many different parts of the state were effected by the extreme weather, insurance companies are expecting damage from the storm to be at least as costly as Hurricane Harvey in 2017. Claims from Harvey totaled about $20 billion. Now the big question is whether insurance companies will cover most of the storm repair cost or whether Texas residents will end up footing the bill. Joining me now is Kyle Arnold, the business report for The Dallas Morning News. Kyle, thank you for being with us.
Kyle Arnold: Thanks for having me, Tanzina.
Tanizina: What is the biggest type of damage claim that Texans are reporting right now?
Kyle: Right now, it's burst pipes inside the house. I was one of the people that lost power. Fortunately I didn't have a burst pipe, but a lot of people had lost power for several days as temperatures dropped into the single digits and our houses here just aren't equipped to carry that kind of cold and the pipes eventually, and oftentimes it would be very loud bangs when these pipes would shatter and even put holes in walls.
Tanizina: We know that there are folks who are homeowners, likely have home insurance, and then there are those folks who are renters. What is the difference in terms of whether or not the renters versus the owners will see some of these issues that they were dealing with repaired at no cost to themselves?
Kyle: Well, one of the issues is that usually if you're a homeowner and you have a mortgage, that you're required to carry some kind of homeowner's insurance. Only a small majority of people either paid it off, probably are elderly. don't have a payment, or if you're extremely wealthy, then you can probably cover the cost on your own. Renting insurance is not always required. You probably won't be required to pay for the cost of repair, but if you did have water damage, like what happened. That's when you figure out there's a pipe that burst, often is because water starts spraying into your home.
Often people had to leave their home for several days or hours at least, and there's a lot of water in their apartment doing a lot of damage. Those are the people that could really be in trouble, the people that were renting in apartments. That's where you saw some of the most dramatic photos of water dripping from ceilings and some of these icicle chandeliers in homes, were often in apartment buildings.
Tanizina: What has the Biden administration done so far? We know that they declared Texas under a Disaster Declaration. Does that affect potential insurance claims?
Kyle: That will help people on the backend after their insurance covers it. Now he extended that to 108 counties yesterday that were the hardest hit here in Texas. After all is said and done, after you deal with your insurance company, FEMA should be able to help you out, but until then, and probably for a couple of weeks now at least, you're going to be dealing with your insurance company first and foremost.
Tanizina: That doesn't sound like a lot of fun. Let's talk about what people in Texas should be doing when dealing with their insurance company. Should they be looking out for anything in particular?
Kyle: One of the struggles right now is just getting your home fixed. If there's a hole in your wall, often you don't have power. You've got to shut it off at the main line. You've got to get that problem solved first and there's not a lot of plumbers, at least not enough plumbers to go around at the moment. What you want to do is you want to get as many quotes as you can. I know that's kind of old, fatherly wisdom, but get as many quotes, if you can get a plumber, and document everything you possibly can with videos. One of the real struggles is going to be, is often you don't know what the problem is behind the wall and how much damage there has been to your home.
Tanizina: Have insurance companies tried to work with this new reality? I mean, are they doing anything different to make things easier to file claims during the pandemic?
Kyle: They actually have adapted. You saw this a little bit before the pandemic, but they have moved in a more kind of virtual claims. If you have a burst pipe in your wall or some other kind of damage, you can do a video walkthrough. They've got a lot of insurance adjusters out in the field, but they're also letting you do that virtually. As long as it's not catastrophic, in the hundreds of thousands of dollars, they're likely to have settled the problem that way.
Tanizina: Do we know whether or not, Kyle, insurance companies are going to start to rethink what they underwrite given this new climate change reality? I mean, the snow storms that hit Texas, the extreme weather that came through. We mentioned Hurricane Harvey earlier. Do we know if they're thinking about rewriting some of what they expect to cover, given the change in the weather?
Kyle: They are definitely thinking about that. I talked to a company that calculates a lot of these catastrophic claims and the total impact on the industry yesterday. You said, [unintelligible 00:18:09] hurricanes, tornadoes, a freak snowstorm here. It's definitely on their mind and they've done little things over the last few years. Not just because of this, but for all things. Like they'll prorate the replacement cost on your roof, or there's just little tiny caveats on your insurance policy that make you-- Either you're required to do things or maybe there are little things that they're not going to cover in the event of some catastrophic events.
Tanizina: Finally, are there any scams that Texans should be aware of right now that are on your radar as far as this moment? We know unfortunately there are people who might try to take advantage of the moment.
Kyle: Yes. That's a lot of contractors we get right now. Somebody comes to your door offering to do cut-rate repairs or wants a big chunk of money upfront. That's what you want to watch out for, because there's kind of a roving band of these guys that come from emergency to emergency.
Tanizina: Just basically make sure you're dealing with someone who is reputable? How does someone determine that?
Kyle: Yes, exactly. You can contact your insurance company or the Better Business Bureau. Look for a licensing and bonding documentation. Even go on Google for reviews is always helpful.
Tanizina: That's what a lot of folks are going to be dealing with these coming days and weeks. Kyle Arnold is a business reporter for The Dallas Morning News. Kyle, thanks so much.
Kyle: I appreciate it.
Jeremy: This is Jeremy, and we live in a neighborhood called Turtle Creek in the center part of Dallas. Everybody around us lost electricity, and I do mean everybody around us lost electricity. We were very grateful that we did not but it left us feeling a little guilty that we perhaps didn't do our fair share of rolling blackouts. We did do our best to turn off and use less electricity, but we've heard some pretty heart-wrenching stories from friends and people around us. One particular friend that nearly froze to death. It's pretty heart wrenching and the damage around town is pretty bad for busted water pipes.
Preston: This is Preston near Dallas, Texas. I lost power at my house for many hours and turned off my water at my own home. Went up to see my parents and was there when their fire suppression system apparently froze. They had taken precautions on outdoor faucets and things, but one of the pipes was more exposed than they realized. The water that came through the light fixture and flooded part of the house would have been definitely a financial strain on me if it had occurred at my own house. I was very fortunate. I have one very small and slow leak that is not as pressing as many other people's. Considering how long it stayed below freezing and how long my power remained out, I am very fortunate to not have experienced more damage.
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