City of San Antonio Acting by and Through City Public Service Board A/K/A CPS Energy v. Public Utility Commission of Texas
506 S.W.3d 630
| Tex. App. | 2016Background
- CPS Energy (City of San Antonio acting through CPS Energy) voluntarily offered 96 MW of non-spinning reserve service (NSRS) from two Braunig CT units for 4–5 a.m. on Feb 2, 2011, during a forecasted severe cold event.
- ERCOT issued deployment instructions at 4:26 a.m.; Braunig CT8 deployed within protocol timelines but CT5 failed to reach Low Sustained Limit within the 30‑minute protocol window and did not come online until 6:09 a.m.
- The CT5 failure was due to a frozen tempering air fan discharge damper and linked hardware; CPS argued this was an unforeseeable equipment failure and relied on built‑in safety shutdowns.
- Texas RE investigated and referred the matter to PUC staff; PUC staff initiated enforcement under the WMO Rule (16 Tex. Admin. Code §25.503), alleging CPS violated ERCOT protocols and recommending a $25,000 penalty.
- At SOAH CPS admitted the late start but argued excuses under WMO §25.503(f) and (h) (equipment beyond control; health/safety/environmental concerns; due diligence defense). ALJ and PUC focused on CPS’s staffing choices during the multi‑day event and concluded CPS failed to prove an applicable excuse; PUC imposed the maximum $25,000 penalty.
- The Travis County district court affirmed the PUC; CPS appealed to the Eighth Court of Appeals, which affirmed.
Issues
| Issue | CPS Energy's Argument | PUC's Argument | Held |
|---|---|---|---|
| 1. Fair notice / due process: Did PUC adopt a novel interpretation of WMO without notice? | TXU/precedent protected unforeseeable mechanical failures; PUC changed rule in enforcement, depriving CPS of fair notice. | WMO §25.503(f) plainly requires compliance with ERCOT protocols; TXU’s holding about diligence in §(h) does not immunize CPS under (f); CPS had notice it could be liable. | Affirmed PUC: CPS had fair notice; PUC’s interpretation consistent with rule and TXU; no improper novel construction. |
| 2. Equipment failure "beyond reasonable control" under §25.503(f)(2)(C) | The frozen damper was unforeseeable and not caused by neglect; therefore beyond CPS’s reasonable control and excused. | Even if initial failure was unforeseen, CPS had continuing obligations: staffing and remedial actions were within its control and the excuse lasts only while the condition remains beyond control. | Affirmed PUC: substantial evidence CPS failed to show the failure remained beyond its reasonable control because it could have taken timely, reasonable steps (staffing, inspection, earlier start attempts). |
| 3. Health/safety/environment excuses under §25.503(f)(2)(C) | Operating CT5 without working damper posed explosion/emission risks and potential permit violations; safety excuse therefore applies. | Unit’s automatic safety shutdown prevented immediate danger; CPS did not exercise due diligence to investigate/repair promptly and did not make a contemporaneous judgment refusing compliance; excuse unavailable. | Affirmed PUC: PUC reasonably required due diligence before or after shutdown; CPS could not rely on safety excuse because it failed to act promptly and notify ERCOT per protocols. |
| 4. ERCOT protocol exemptions (operating limits / compliance safe‑harbor) | Protocols allow refusal where compliance would risk safety or where operator‑set equipment limits exist; these “trump” obligations. | Exemptions require (a) CPS had to notify ERCOT of equipment limits and (b) the QSE must in its sole and reasonable judgment decline and immediately notify ERCOT — neither occurred. | Affirmed PUC: Protocol safe harbors inapplicable because CPS did not notify ERCOT or make a contemporaneous reasonable judgment to refuse compliance. |
Key Cases Cited
- TXU Generation Co., L.P. v. Pub. Util. Comm’n of Texas, 165 S.W.3d 821 (Tex. App.—Austin 2005) (WMO §(h) diligence defense interpreted to give notice that truly unforeseen accidents ordinarily will not create liability)
- CenterPoint Energy Houston Elec., LLC v. Pub. Util. Comm’n of Texas, 408 S.W.3d 910 (Tex. App.—Austin 2013) (review standard and deference to agency expertise under substantial‑evidence rule)
- State v. Pub. Util. Comm’n of Texas, 246 S.W.3d 324 (Tex. App.—Austin 2008) (administrative review principles; deference to agency interpretations when reasonable)
- Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248 (Tex. 1999) (statutory/regulatory construction: unambiguous text controls; courts reverse agency actions that conflict with clear rule language)