(The Center Square)) – A Texas judge has ordered San Antonio’s city-owned utility to pay nearly $400 million to two natural gas companies after ruling it broke contracts signed during Winter Storm Uri in 2021.
State District Judge Laura Salinas ruled that CPS Energy must pay subsidiaries of Energy Transfer after finding the utility failed to pay for natural gas it bought during the historic winter storm. Her July 2 ruling says the contracts “are not unconscionable and must be enforced.”
The final judgment includes about $264 million in unpaid contract costs, roughly $119 million in interest before the ruling, and more than $9.3 million in attorney fees. CPS Energy must also pay court costs and interest that continues after the judgment.
The legal fight began after Winter Storm Uri hit Texas in February 2021. Freezing temperatures caused major power outages across the state while demand for electricity and natural gas reached record highs. Meanwhile, frozen wells, pipelines, and processing plants sharply reduced the natural gas supply, sending prices much higher.
CPS Energy argued that the prices it agreed to pay during the emergency were so high that they should not be enforced. The utility sued several natural gas suppliers, including Energy Transfer, and argued the prices were unconscionable.
Energy Transfer argued that CPS Energy willingly entered into the contracts and that the prices reflected real market conditions during a once-in-a-generation supply shortage. The company also argued that CPS relied heavily on the spot market instead of locking in more long-term natural gas supplies before the storm, leaving it more exposed when prices spiked.
Salinas agreed with Energy Transfer’s position. She ruled that CPS Energy breached the contracts and rejected the utility’s argument that the agreements should not be enforced due to the high prices.
CPS Energy said it was disappointed with the decision and is considering an appeal.
“The court’s decision … 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 Texas Public Radio.
Energy Transfer welcomed the ruling.
“The court’s decision affirms that contracts executed under Texas’ market rules remain enforceable, even during extreme events,” the company said in a statement. “Winter Storm Uri created unprecedented supply shortages that drove prices higher, reflecting market conditions, not misconduct.”
The company added that the ruling confirms it “acted appropriately under existing market rules while continuing to supply critical natural gas during a statewide emergency.” It also said the decision gives energy suppliers more certainty as they prepare for future grid emergencies.
