With today’s orders list, the Texas Supreme Court issued two decisions and granted review in one new cases.
Cities do not have sovereign immunity against suits for “unilateral contract” based on a city ordinance
The case is The City of Houston v. Steve Williams, et al., No. 09-0770 (DDB), brought by a group of firefighters alleging they were not paid the full amount of promised benefits. I will be writing a little more about this in a separate post.
Electric deregulation… with an interesting statutory construction holding about “impossible” conditions.
State of Texas, et al. v. Public Utility Commission of Texas, et al., No. 08-0421 (Willett, J.) (DDB).
This is an electric-deregulation appeal. Normally it’s the bloggers who would say that it was “complex” or posed “vexing questions.” But that’s how the first paragraph of the opinion sets things up.
Most of the substance here is very specific to the process of electric deregulation in Texas in the early 2000s. The rates in question were charged in 2002 and 2003 — these regulatory appeals can take their time to bubble up through the system.
But there is statutory-construction holding that might get attention outside of this regulatory framework.
Section 39.153(a) of the Texas Utilities Code set up “Capacity Auctions” for the utilities to sell portions of their existing generation capacity to others — and it required them to sell “at least 15 percent of the electric utility’s Texas jurisdictional installed generation capacity.” Other portions of the statute gave rule-making power to the Public Utility Commission (PUC). The PUC, in turn, issued rules that required Genco, the utility here, to sell that generation capacity “in four product categories: baseload, gas-intermediate, gas-cyclic, and gas-peaking.” If a utility met the requirement, it could receive a higher level of compensation for the deregulation; if it did not meet this requirement, then its recovery would be far lower.
Genco met that requirement — except that it could not sell enough “gas-intermediate” in 2003, even after requesting modifications in the procedures from the PUC.
As a result, the PUC concluded that Genco could not receive the full compensation. The PUC thus reduced Genco’s “true-up amount” by $439.7 million.
The Texas Supreme Court disagreed, refusing the interpret the statute’s 15% language as an absolute requirement because it was just too hard to meet:
the record indicates that Genco made a good faith effort to comply with this statute and was simply unable to sell by auction, at any price, the amount of one product category required by PUC rules. It points out that no utility was able to sell all its gas-intermediate entitlements for even one month in 2003. We avoid statutory constructions that impose an impossible condition.
The Court concluded that the Legislature’s dual goals here — of creating a competitive market while compensating the utilities fairly — would be thwarted if a roughly $5000 shortfall in one auction led to a reduction of more than $400 million in the true-up amount.
The Court reversed and remanded the case to the PUC to redo its calculation in light of this opinion.
New petition granted (on rehearing)
The Court granted a new petition off of its rehearing docket, with oral argument to be scheduled at a later time.
Venkateswarlu Thota, M.D. and North Texas Cardiology Center v. Margaret Young, et al., No. 09‑0079 (DDB). Several issues are presented, but the key seems to be a challenge to whether the plaintiff had preserved error on his challenge to the jury charge. The question is whether the charge included both valid and invalid theories — what Texas appellate lawyers will recognize as a Casteel problem. The petitioner argues that the plaintiff’s objections at the charge conference (a “plain vanilla no-evidence objection”) did not sufficiently preserve error on the point presented on appeal.