Will better S2S weather forecasts demand a different trial outcome for Texas power generators?

In December 2023,  Texas power generators scored a multibillion-dollar victory when Chief Justice Terry Adams issued the Houston Court of Appeals for the First District of Texas that Texas does not currently recognize a legal duty owed by wholesale power generators to retail customers to provide continuous electricity to the electric grid. A concise summary of the ruling is here in the Houston Chronicle by Mark Curriden of Texas LawBook .

This is on the heels of the June 2023 Supreme Court of Texas decision that dismissed ERCOT, the operator of Texas’ electric grid, from litigation that ensued from the lack of preparations for the freezing weather of Winter Storm Uri. Pithy summary of that decision here by Emily Foxhall in the The Texas Tribune .

Consumers have been making the case for negligence: generators failed to winterize their systems (among other issues) against sub-freezing temperatures and precipitation anomalies. And we’re all too familiar with what happened. Energy demand increased, power generators froze, 250+ people died, pipes burst and ceilings collapsed, and on and on. More on that in The Texas Standard, a daily news show collaboration between Texas Public Radio , KERA, KUT & KUTX Public Media , and Houston Public Media .

How would the December 2023 trial have unfolded differently if wholesale power generators and retail electricity providers could have seen the storm coming earlier?  Do better S2S (seasonal to sub-seasonal) weather forecasts unlock a different future? 

No weather forecast will ever be perfect and the structure of Texas electricity markets is a complicated space. Still, the step-change in the accuracy and reliability of S2S forecasts unlocked by novel land- and ocean-based inputs and machine learning (more on the unlock here from Salient data scientist Fran Bartolić ) begs the question if “Acts of God” will be viewed differently in the future. 

Force Majeure and Acts of God are the legal concepts that exempt contracted parties from responsibility when unforeseeable circumstances or uncontrollable natural forces prevail. 

As S2S weather forecasting improves and we push the industry towards probabilistic decision-making (detail on the industry shift from Salient CEO Matt Stein ), we wonder how these concepts — particularly as they relate to weather — will evolve. 

Salient has been exploring this concept with some of the firms that represented the defendants and plaintiffs in the recent Texas trials and is always open to continuing the conversation. Tag Gibson Dunn , Frame Law, PLLC Baker Botts , Jackson Walker LLP and Tré Fischer , Kirkland & Ellis , Brent Coon & Associates , Robins Cloud LLP , Arnold & Itkin LLP , Guerra LLP , and Grotefeld Hoffmann from the Kirkland & Ellis recap of the ruling.

And if weather-related Acts of God are viewed differently with better S2S forecasts in the power and electricity sector, how might the conversation unfold in the chemical, oil & gas, and other industries where public safety is the highest priority? Tag U.S. Chemical Safety and Hazard Investigation Board , National Association Of Safety Professionals , API - American Petroleum Institute , INTERNATIONAL ASSOCIATION OF OIL & GAS PRODUCERS