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State District Judge Laura Salinas has ordered the municipally owned utility CPS Energy to pay nearly $400 million to two Energy Transfer subsidiaries after ruling it breached contracts for natural gas purchased during the February 2021 winter storm.
In a final judgment signed July 2, Salinas awarded Houston Pipe Line Company and Oasis Pipeline nearly $264 million in unpaid contract amounts, about $119 million in prejudgment interest and more than $9.3 million in attorneys' fees. The ruling also requires CPS Energy to pay court costs and post-judgment interest.
The ruling follows a 12-day bench trial that ended in April.
The case stems from the February 2021 winter storm, when widespread power outages and record demand for electricity and natural gas sent fuel prices soaring across Texas. CPS Energy spent about $850 million on fuel during the storm. Customers are continuing to repay a portion of those storm-related fuel costs through a monthly surcharge that adds about $1.26 to the average residential bill and is expected to remain in place for about 21 more years.
At the heart of the case was whether contracts signed during one of the most volatile energy markets in Texas history could be enforced. Energy Transfer argued CPS Energy relied heavily on short-term market purchases rather than locking in natural gas at fixed prices before the storm. CPS Energy countered that the prices it ultimately paid were so extreme they should not be enforced.
In her written findings, Salinas concluded that "CPS breached the contracts" and that "the contracts are not unconscionable and must be enforced." She found the contracts remained enforceable despite CPS Energy's arguments that the prices were unconscionable.
The court found Houston Pipe Line Company and Oasis Pipeline invoiced CPS Energy about $309 million for natural gas delivered during the storm. CPS Energy paid nearly $52 million but withheld about $264 million after disputing the charges.
"CPS Energy is disappointed by the court's decision, which will cost this community more than $390 million and may effectively end a key legal safeguard against grossly unfair treatment for essential services like natural gas during the next statewide disaster," the utility said in a statement to TPR.
CPS Energy said costs related to the litigation remain part of the $1 billion regulatory asset approved by the CPS Energy Board and San Antonio City Council. The utility said it would not comment further while it considers its appellate options and that it remains committed to standing up for its customers.
Energy Transfer said the ruling confirms CPS Energy is responsible for honoring its contracts.
"The message is clear: CPS Energy must pay its bills just like everyone else," the company said in a statement to TPR. Energy Transfer said the bills reflected market conditions at the time and argued CPS Energy failed to prepare adequately for the storm, leaving it no choice but to sue to enforce the contracts.
The ruling comes as San Antonio leaders weigh a proposed CPS Energy base rate increase. The City Council, which oversees the municipally owned utility, delayed a vote until October to allow additional analysis of the utility's finances and future needs.
