Texas Supreme Court May Clarify Scope of PUC Jurisdiction in Contract Disputes

On December 8, 2017, the Texas Supreme Court agreed to hear the appeal of Oncor Electric Delivery Company (“Oncor”) in a case that resulted in a judgment against Oncor of approximately $500,000 in damages, interest, and attorneys’ fees.  In its appeal, Oncor asserts that the court entering that judgment had no jurisdiction and that only the Texas Public Utility Commission (“PUC”) can resolve this dispute.

In accepting the case, the Texas Supreme Court may clarify the jurisdiction of the PUC regarding contract disputes that may affect an electric utility’s rates, operations, and services.

Oncor’s Delay in Providing Electric Service

Chaparral Energy (“Chaparral”) contracted with Oncor for construction of facilities to allow Oncor to provide electric service to Chaparral’s oil wells. Chaparral claimed that Oncor failed to timely construct the facilities.  Chaparral sued, and obtained the judgment based on a jury verdict.

In prevailing at trial, Chaparral successfully argued that Oncor breached an implied contractual term to complete the facilities in a reasonable time.

Role of the PUC Approved Tariff

On appeal, Oncor argued that any determination of the presence of such an implied term would be an interpretation of the Tariff that the PUC had already approved, and thus was subject to the PUC’s exclusive jurisdiction.

Oncor lost before an intermediate court of appeals, which determined that this dispute was not subject to the PUC’s exclusive jurisdiction.  The intermediate appellate court suggested that the dispute might have been subject to the PUC’s primary jurisdiction, but that Oncor failed to raise any issue of primary jurisdiction.  Unlike exclusive jurisdiction, primary jurisdiction of a state agency can be waived.

In accepting the appeal in this case, the Texas Supreme Court may clarify Texas law regarding the scope of primary and exclusive jurisdiction of the PUC, and the reasoning may affect the scope of authority of other Texas administrative agencies.

Oral argument is set for February 7, 2018.

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