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Home / Insurance / Allegations of frozen pipes and water – are network and power operators facing liability and subrogation lawsuits? | Legal insurance blog about property insurance

Allegations of frozen pipes and water – are network and power operators facing liability and subrogation lawsuits? | Legal insurance blog about property insurance

It's been an incredible sight this past week in Texas. Although it did not seem cool to go to work, it was the cold that prevented everyone from going anywhere. It all started in my hometown of Fort Worth, Texas. At least six people died and dozens were taken to hospital after an accident involving more than 100 vehicles in a Fort Worth state. A pileup that was the most astonishing of the crashes that dotted icy roads across the Dallas-Fort Worth metroplex. 1

Little did anyone know that this frightening event was just the beginning of what Texans across the state would have to put up with. This weather caused us to witness lines at HEB winding around the buildings while people patiently waited for water to drink, sliding cars all over the roads and many deaths related to carbon monoxide poisoning and freezing temperatures.

Before we went to law school, I worked as an engineer for a power generation company. We worked very closely with all units across the country that were responsible for electricity administration. We would work close to them to provide power through various energy portfolios, whether it is oil & gas, nuclear power or renewable energy sources such as solar and wind.

The winter storm that left millions of Texans without power and water in the past week is expected to generate the most insurance claims arising from a single event in the state's history, experts say, testing a legal system already burdened by a backlog of civil disputes caused by COVID-1

9 delays and restrictions. Now that I'm on the other side, all this made me wonder what liability could be for these companies, especially those responsible for predicting energy needs in times of abnormal weather.

There are a total of eight reliability regions in the continental United States, and each of these regions is covered by the North American Electric Reliability Corporation (NERC) regulatory authority. NERC is responsible for developing standards to ensure and improve the reliability of electricity supply to the bulk power system. In addition, NERC is subject to Federal Energy Regulatory Commission (FERC) supervision. FERC works to help consumers obtain reliable, efficient and sustainable energy services at a reasonable cost through appropriate regulatory and marketing methods. 2

There are four separate units responsible for handling the supply of electric power to Texas consumers:

  • Electric Reliability Council of Texas (ERCOT) – which covers about 75 percent of the land area in Texas and represents about 90 percent of the state's electrical load
  • Midcontinent Independent System Operator (MISO) – which has a presence in East Texas
  • Southwest Power Pool (SPP) – which covers the pan handle and the Northeast the corner of Texas; and
  • Western Electricity Coordinating Council (WECC) – which provides the western part of the state

ERCOT is responsible for the operation of the network. The massive winter storm caused the state's network operator to carry out rolling power outages, so-called load emissions, to avoid catastrophic system collapse after a significant part of generating units were forced offline. The generators that are usually online to ensure we do not suffer from a blackout were frozen. Most of that power comes from natural gas. When the winter storm rolled through, the natural gas pipelines were dropped by ice or deactivated by losing power and demand increased at the same time. Wind turbines freeze routinely in cold weather and cannot work in times when the wind resource is at its highest, and therefore do not catch the "fuel" when we need it most. Widespread property damage, forced business closures, individual damages and deaths followed. 3

Because the Texas grid is not connected to a national one, it could not import extra power, according to the Washington Post. Critics, including some Texas leaders, argue that ERCOT was not prepared even though they knew the storm was coming and have not invested enough in weather-resistant infrastructure. The severe weather initially left an estimated four million homes without power by Tuesday morning, according to the Texas Tribune killing at least ten. The cold front that swept over Texas brought with it two to nine inches of snow and ice, according to the Houston Chronicle .

Apart from insurance claims arising from frozen pipes, expect to see companies and individuals suing. certain players in the energy sector. Last Thursday, ERCOT and Houston power supplier CenterPoint Energy were sued with a $ 10 million lawsuit over the outage. 4 There is a problem, ERCOT currently has sovereign immunity. ERCOT is the only network administrator in the nation with sovereign immunity, a well-established legal principle that protects governments and their bodies from litigation.

Leslie Thorne, Co-Chair of the Haynes and Boone LLP Disputes Group, "The viability of these [lawsuits] can be questioned," Thorne said, referring to the different levels of government immunity and liability applicable to certain companies. "We will see people sue in state courts before judges who have been personally influenced, and whether they will ultimately go ahead remains to be seen … but I think you will see a significant number of insurance claims related to them suits under different types of policies. 5

The Supreme Court of Texas has agreed to review a lower court's ruling that the state's power grid manager is entitled to sovereign immunity. 6 The Supreme Court of Texas has not set a date for processing the argument and is backed up from the pandemic. The Supreme Court's decision is expected to have far-reaching consequences in Texas and on the power grid on which the state and its economy depend. It can determine whether electricity buyers and sellers can hold the grid responsible for pricing errors, ill-conceived power supply forecasts or the consequences for life and death of power outages.

If you are considering filing a claim, be careful with attorneys who are not There are no engaged insurance attorneys. If you are a lawyer, you should be careful about advising potential clients. Texas has seen the most deviant number of property insurances in recent years. This means that State Farm's policies are different from Allstate's and USAA's are different from travelers, and so on.

If a lawyer starts giving advice without looking at the policy, general advice can very quickly become bad advice. Avoid overgeneralizations when talking to potential customers.
1 https://www.dallasnews.com/news/weather/2021/02/11/winter-weather-causes-hazardous-conditions-on -north-texas-roads / [19659018] 2 https://www.aect.net/texas-electricity/
3 https://www.law360.com/insurance/articles/1356471 / texas-winter-storm-to -bring-avalanche-of-insurance-claims? nl_pk = 318a29fe-e46a-4d88-8c50-46d5bb1a9885 & utm_source = newsletter & utm_medium = email & utm_campaign = insurance [195659022] 1990]] 5 https://www.law360.com/ 1356471 / texas-winter-storm-to-bring-avalanche-of-insurance-claims
6 https: //www.houstonchronicle .com/company/energy/article/The Supreme Court will review-ERCOT- s-immunity-from-15326069.php

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