Supreme Court of Texas 

══════════

No. 22-0056 

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CPS Energy, 

Petitioner, 

v. 

Electric Reliability Council of Texas, 

Respondent 

═══════════════════════════════════════

On Petition for Review from the 

Court of Appeals for the Fourth District of Texas 

═══════════════════════════════════════

~and~ 
2 

══════════

No. 22-0196 

══════════

Electric Reliability Council of Texas, Inc., 

Petitioner,

v. 

Panda Power Generation Infrastructure Fund, LLC d/b/a Panda 

Power Funds; Panda Sherman Power Holdings, LLC; Panda 

Sherman Power Intermediate Holdings I, LLC; Panda Sherman 

Power Intermediate Holdings II, LLC; Panda Sherman Power, 

LLC; Panda Temple Power Holdings, LLC; Panda Temple Power 

Intermediate Holdings I, LLC; Panda Temple Power 

Intermediate Holdings II, LLC; Panda Temple Power, LLC; 

Panda Temple Power II Holdings, LLC; Panda Temple Power II 

Intermediate Holdings I, LLC; Panda Temple Power II 

Intermediate Holdings II, LLC; and Panda Temple Power II, 

LLC, 

Respondents

═══════════════════════════════════════

On Petition for Review from the 

Court of Appeals for the Fifth District of Texas 

═══════════════════════════════════════

Argued January 9, 2023 

CHIEF JUSTICE HECHT delivered the opinion of the Court, in which 

Justice Blacklock, Justice Bland, Justice Huddle, and Justice Young 

joined, and in which Justice Lehrmann, Justice Boyd, Justice Devine, 

and Justice Busby joined except as to Part IV. 

JUSTICE BOYD and JUSTICE DEVINE filed a dissenting opinion, in 

which Justice Lehrmann and Justice Busby joined. 
3 

These two cases present three questions concerning the Electric 

Reliability Council of Texas, Inc.: (1) Is ERCOT a governmental unit as 

defined in the Texas Tort Claims Act and thereby entitled to pursue an 

interlocutory appeal from the denial of a plea to the jurisdiction? 

(2) Does the Public Utility Commission of Texas have exclusive 

jurisdiction over the parties’ claims against ERCOT? And (3) is ERCOT 

entitled to sovereign immunity? The answer to all three questions is yes. 

In No. 22-0056,1 we affirm the court of appeals’ judgment2 dismissing 

the claims against ERCOT. In No. 22-0196,3 we reverse the court of 

appeals’ judgment4 and render judgment dismissing the claims against 

ERCOT. 

I 

“In its electrical grid, as in so many things, Texas stands alone.”5

Most of the state comprises the U.S. mainland’s only intrastate electrical 

grid,6 which covers 75 percent of the state’s acreage, carries about 90 

percent of its electrical load, and includes more than 52,700 miles of 

transmission lines, 1,100 generation units, and 26 million electricity 

1 CPS Energy v. Electric Reliability Council of Tex.

2 648 S.W.3d 520 (Tex. App.—San Antonio 2021). 

3 Electric Reliability Council of Tex., Inc. v. Panda Power Generation 

Infrastructure Fund, LLC. 

4 641 S.W.3d 893 (Tex. App.—Dallas 2022) (en banc). 

5 Texas v. EPA, 829 F.3d 405, 431 (5th Cir. 2016). 

6 See New York v. FERC, 535 U.S. 1, 7 (2002) (“It is only in Hawaii and 

Alaska and on the ‘Texas Interconnect’—which covers most of that State—that 

electricity is distributed entirely within a single State.”). 
4 

customers.7 The Public Utility Regulatory Act (PURA) requires the 

Public Utility Commission (PUC) to certify an independent system 

operator (ISO) for the Texas power region.8 The PUC certified ERCOT, 

a membership-based 501(c)(4) nonprofit corporation.9 

ERCOT was formed in 1970 by various Texas electric utilities 

that had interconnected their grids for greater reliability and increased 

capacity.10 Membership was “available to any electric utility [that] 

own[ed], control[led] or operate[d] an electric power system in Texas”.11

In those days, each member utility operated its own control area, and 

ERCOT served an administrative role that “promote[d] reliable 

operations of power systems in Texas by providing a means to 

7 Oncor Elec. Delivery Co. v. Pub. Util. Comm’n, 507 S.W.3d 706, 708 

n.1 (Tex. 2017); ERCOT Organization Backgrounder, ERCOT, 

https://www.ercot.com/news/mediakit/backgrounder (last visited June 15, 

2023); Fact Sheet, ERCOT (June 8, 2023), https://www.ercot.com/files/

docs/2022/02/08/ERCOT_Fact_Sheet.pdf. 

8 TEX. UTIL. CODE § 39.151(a), (c). The Texas power region is also known 

as ERCOT. See id. § 31.002(5) (defining ERCOT as “the area in Texas served 

by electric utilities, municipally owned utilities, and electric cooperatives that 

is not synchronously interconnected with electric utilities outside the state”). 

To avoid confusion, we refer to the nonprofit corporation that is party to these 

cases as ERCOT and the area served by the interconnected grid as the Texas 

power region. 

9 16 TEX. ADMIN. CODE § 25.361; ERCOT Organization Backgrounder, 

supra note 7. 

10 See W. Tex. Utils. Co. v. Tex. Elec. Serv. Co., 470 F. Supp. 798, 808-

809 (N.D. Tex. 1979); Jared M. Fleisher, ERCOT’s Jurisdictional Status: A 

Legal History and Contemporary Appraisal, 3 TEX. J. OIL GAS & ENERGY L. 4, 

10-11 (2008). 

11 W. Tex. Utils. Co., 470 F. Supp. at 808. 
5 

communicate and coordinate the planning and operation of its 

members.”12 

In 1999, the Legislature restructured the electric utility industry 

in Texas.13 It amended PURA to require the “[u]nbundling” of vertically 

integrated electric utility monopolies and established a fully competitive 

electric power industry.14 The new structure required an ISO to operate 

the wholesale electric market and “ensure the reliability and adequacy” 

of the Texas power grid.15 Since 2001, ERCOT has served as that 

“[e]ssential [o]rganization[]”.16

The two cases before us stem from different facts and different 

parties, but they raise overlapping jurisdictional questions. 

A 

CPS Energy, a municipally owned utility that serves the San 

Antonio area, is a market participant in the ERCOT wholesale market. 

CPS buys and sells power through ERCOT, so ERCOT both collects 

money from CPS and pays money to CPS. The parties settle the amounts 

owed by each side and pay each other accordingly in what they call 

12 Id.; see Fleisher, supra note 10, at 11. 

13 Act of May 27, 1999, 76th Leg., R.S., ch. 405 § 39, 1999 Tex. Gen. 

Laws 2543, 2558 (codified at TEX. UTIL. CODE ch. 39). 

14 TEX. UTIL. CODE § 39.051; see id. § 39.001(a), (b); Oncor Elec. Delivery 

Co., 507 S.W.3d at 708-709. 

15 TEX. UTIL. CODE § 39.151(a). 

16 Id. § 39.151; 16 TEX. ADMIN. CODE § 25.361. On May 28, 2023, the 

Legislature amended Section 39.151. The amendments are effective September 

1, 2023, and they do not affect the proceeding analysis or our holding. See Act 

of May 28, 2023, 88th Leg., R.S., ch. 410, § 15, 2023 Tex. Sess. Law Serv. ___ 

(H.B. 1500). 
6 

“settlement” payments. At issue here are payments from ERCOT to 

CPS. CPS’ participation in the market is governed by the terms of a 

Standard Form Market Participant Agreement, PURA, and the ERCOT 

Protocols, which are rules promulgated by ERCOT to manage the 

market and the grid. 

In February 2021, Texans endured the catastrophic Winter Storm 

Uri. On February 15, just as the storm hit, ERCOT declared its highest 

state of emergency, Emergency Energy Alert Level 3, and directed 

transmission operators to curtail firm load. The PUC then directed 

ERCOT to set the per-megawatt-hour price of electricity at the highest 

permissible rate of $9,000 to reflect scarcity of supply. ERCOT recalled 

its firm load shed instructions on February 17 but kept prices at the cap 

rate for an additional 32 hours through the morning of February 19. CPS 

alleges that ERCOT should have ended its pricing intervention when it 

recalled its firm load shed instructions and that its failure to do so 

resulted in $16 billion in overcharges to market participants. 

Some market participants defaulted after the storm. Pursuant to 

its Protocols, ERCOT then implemented its “short-pay” procedure and 

its “Default Uplift process”.17 These processes spread the impact of the 

default, allocating the loss among market participants—including 

CPS—by reducing the amounts they are owed by ERCOT.18 CPS alleges 

that it was short-paid at least $18 million through the short-pay process. 

It also alleges that ERCOT intended to apply two downward 

17 See ERCOT NODAL PROTOCOLS §§ 9.19(1)(d)-(e), 9.19.1. 

18 See id. §§ 9.19(1)(d)-(e), 9.19.1. 
7 

adjustments to the credit in CPS’ account by over $1 million each 

through the default-uplift process.19

CPS sued ERCOT and several of its officers for breach of contract, 

negligence, breach of fiduciary duty, and violations of the Texas 

Constitution.20 ERCOT filed a plea to the jurisdiction, arguing that CPS’ 

claims are barred by sovereign immunity and, alternatively, that the 

PUC has exclusive jurisdiction over the claim. The trial court denied the 

plea.21

ERCOT appealed, asserting that it is a governmental unit 

entitled to an interlocutory appeal from the denial of a plea to the 

jurisdiction.22 ERCOT also sought review by petition for writ of 

mandamus in the event it is not entitled to an interlocutory appeal. After 

one court of appeals panel summarily denied mandamus relief,23

ERCOT filed its petition for writ of mandamus in this Court24 to 

19 CPS secured a temporary restraining order from the trial court that 

prevented ERCOT from applying these downward adjustments. The court of 

appeals dissolved its order extending the temporary restraining order when it 

dismissed CPS’ claims. 648 S.W.3d at 541. 

20 CPS also alleged that ERCOT’s executives and board acted ultra vires 

and it sought prospective injunctive relief against downward adjustments for 

the storm-related default through the default-uplift process. CPS later 

nonsuited all individual defendants except Bill Magness, ERCOT’s former 

CEO. The court of appeals determined that Magness was not a party to the 

plea to the jurisdiction that is the subject of this appeal. Id. at 532-533. 

21 The trial court also denied ERCOT’s motion to transfer venue to 

Travis County. 

22 See TEX. CIV. PRAC. & REM. CODE § 51.014(a)(8). 

23 2021 WL 2814899 (Tex. App.—San Antonio July 7, 2021) (mem. op.). 

24 In re Elec. Reliability Council of Tex., Inc., No. 21-0834. 
8 

continue the alternative path to review. A different court of appeals 

panel then held that ERCOT is a governmental unit entitled to take an 

interlocutory appeal, that the PUC has exclusive jurisdiction over CPS’ 

claims, and that CPS’ claims should be dismissed.25 We granted review 

and set the case for oral argument on the same day as the case brought 

by the Panda Power Companies.26

B 

As part of ERCOT’s functions, the PUC requires ERCOT to 

annually publish resource adequacy reports that project, for at least the 

next five years, the capability of existing electric generation resources to 

meet projected demand in the Texas power region.27 ERCOT does so by 

publishing “Capacity, Demand, and Reserves” reports (CDRs). ERCOT’s 

2011 and 2012 CDRs projected a likelihood of severe energy shortfalls. 

Panda, a group of private-equity investors, alleges that it relied on these 

reports when it decided to invest billions of dollars to build three new 

power plants. After construction on the new plants began, ERCOT 

revised its CDRs and forecast a future oversupply of generation 

capacity. Panda sued ERCOT for fraud, negligent misrepresentation, 

and breach of fiduciary duty. Panda alleges that ERCOT’s misleading 

reports caused it substantial financial harm and seeks damages in 

excess of $2 billion. 

The procedural history of this case is long and complex, and we 

recite only what is relevant to the disposition of this appeal. ERCOT 

25 648 S.W.3d at 531, 541. 

26 ERCOT’s petition for writ of mandamus is dismissed as moot. 

27 TEX. UTIL. CODE § 39.155(b); 16 TEX. ADMIN. CODE § 25.505(b). 
9 

filed two pleas to the jurisdiction arguing that the PUC has exclusive 

jurisdiction over Panda’s claims and that ERCOT has sovereign 

immunity. The trial court denied both. ERCOT appealed, arguing that 

it is a “governmental unit” under the Texas Tort Claims Act entitled to 

an interlocutory appeal from the denial of its plea to the jurisdiction.28

ERCOT alternatively sought review by mandamus. The court of appeals 

consolidated the appeal and mandamus petition and held that ERCOT 

is not a governmental unit entitled to an interlocutory appeal but that 

ERCOT has sovereign immunity.29 Accordingly, the court of appeals 

dismissed ERCOT’s interlocutory appeal for lack of jurisdiction, 

conditionally granted its petition for writ of mandamus, and directed the 

trial court to dismiss the case for lack of jurisdiction.30 The trial court 

immediately complied, and Panda appealed. The court of appeals, then 

sitting en banc, changed course. Relying on three immunity cases 

decided by this Court in the interim, and with one justice dissenting, the 

court held that ERCOT is not entitled to sovereign immunity and that 

the PUC does not have exclusive jurisdiction over Panda’s claims.31 We 

granted ERCOT’s petition for review. 

28 TEX. CIV. PRAC. & REM. CODE § 51.014(a)(8); id. § 101.001(3). 

29 Elec. Reliability Council of Tex., Inc. v. Panda Power Generation 

Infrastructure Fund, LLC, 552 S.W.3d 297, 301 (Tex. App.—Dallas 2018), pet. 

dism’d as moot, 619 S.W.3d 628, 631 (Tex. 2021). 

30 Id. Additional procedural history thereafter is available in this 

Court’s prior opinion. Elec. Reliability Council of Tex., Inc. v. Panda Power 

Generation Infrastructure Fund, LLC, 619 S.W.3d 628, 632-634 (Tex. 2021). 

31 641 S.W.3d at 899. 
10 

II 

The first issue arises from CPS’ petition: whether ERCOT is a 

governmental unit under the Texas Tort Claims Act and thus entitled 

to take an interlocutory appeal from the denial of a plea to the 

jurisdiction.32 “Although private institutions are not commonly 

understood to be a part ‘of government,’ we have held that a private 

institution can be a governmental unit”, as is the case here.33

“[T]he general rule, with a few mostly statutory exceptions, is that 

an appeal may be taken only from a final judgment.”34 However, certain 

statutes authorize interlocutory appeals over particular kinds of trial 

court orders.35 Section 51.014(a)(8) of the Civil Practice and Remedies 

Code authorizes an interlocutory appeal from a trial-court order that 

“grants or denies a plea to the jurisdiction by a governmental unit as 

that term is defined” in the Tort Claims Act.36 In turn, the Tort Claims 

Act defines “[g]overnmental unit” to include not only the state and its 

agencies and political subdivisions, but also “any other institution, 

agency, or organ of government the status and authority of which are 

derived from the Constitution of Texas or from laws passed by the 

32 See TEX. CIV. PRAC. & REM. CODE § 51.014(a)(8); id. § 101.001(3). 

33 Univ. of the Incarnate Word v. Redus (Redus I), 518 S.W.3d 905, 907 

(Tex. 2017). 

34 Bonsmara Nat. Beef Co. v. Hart of Tex. Cattle Feeders, LLC, 603 

S.W.3d 385, 387 (Tex. 2020) (quoting Lehmann v. Har-Con Corp., 39 S.W.3d 

191, 195 (Tex. 2001)). 

35 See id. at 390 & n.3. 

36 TEX. CIV. PRAC. & REM. CODE § 51.014(a)(8); see id. § 101.001(3). 
11 

legislature under the constitution.”37 Thus, a private, non-governmental 

entity can qualify as a governmental unit under this definition, but only 

if (1) it is an institution, agency, or organ of government; and (2) it 

derives its status and authority as such from the Texas Constitution or 

statutes.38

A 

In LTTS Charter School, Inc. v. C2 Construction, Inc., we held 

that an open-enrollment charter school qualified as a governmental unit 

because it was “indisputably part of the Texas public-education system” 

and derived that status and authority from state statutes.39 Our holding 

centered on various statutory pronouncements. We concluded that openenrollment charter schools derive their status from the Education Code, 

which provides that they are “part of” the state’s public-school system.40

Their authority is also derived from the Education Code, which assigns 

them responsibilities for implementing the public-education system, 

provides them with substantial public funding and resources, grants 

them the same powers and privileges of traditional public schools, and 

subjects them to the same rules that govern public schools.41 Finally, the 

Education Code designates open-enrollment charter schools as 

“governmental entit[ies]”, “political subdivision[s]”, and “local 

37 Id. § 101.001(3). 

38 Id.; Redus I, 518 S.W.3d at 907. 

39 342 S.W.3d 73, 76 (Tex. 2011). 

40 Id. at 77. 

41 Id. at 77-78. 
12 

government[s]” for various purposes.42 

In University of the Incarnate Word v. Redus (Redus I), we 

concluded that a private university that operates a state-authorized 

police department qualifies as a governmental unit when defending 

suits relating to the department’s actions.43 We acknowledged that, 

unlike the charter schools at issue in LTTS, private universities do not 

receive public funding and are not statutorily labeled as governmental 

entities for any particular purpose.44 Nevertheless, we observed that 

state statutes grant private universities the “status and authority” to 

operate a police department using commissioned peace officers and 

subject them to state law-enforcement rules and requirements, just like 

a municipal police department.45 And although no statute expressly 

designates a private university or its police department as “part of” the 

state’s law-enforcement system, we concluded that the university was 

an “organ of government” for purposes of its police department because 

it “operates as part of a larger governmental system” and performs the 

“uniquely governmental” function of law enforcement.46

B 

CPS maintains that unlike in LTTS and Redus I, there are no 

strong legislative indicators of governmental-unit status in relation to 

ERCOT and that in concluding otherwise, the court of appeals applied 

42 Id. at 78 (quoting TEX. EDUC. CODE § 12.1053). 

43 518 S.W.3d at 906. 

44 Id. at 910. 

45 Id. at 909; see id. at 910-911. 

46 Id. at 909, 910, 911. 
13 

an impermissibly broad view of “organ of government”. It argues further 

that ERCOT does not perform a “uniquely governmental function” and 

that ERCOT’s actions during the winter storm event were merely 

operational. For its part, ERCOT contends that it is an organ of 

government because it is an essential part of a larger governmental 

system, namely the PUC’s regulation of electric utilities, as evidenced 

by its delegated rulemaking authority and various provisions of PURA. 

1 

As we recognized in Redus I, an “organ of government” is an entity 

that “operates as part of a larger governmental system” and performs a 

“uniquely governmental” function.47 Here, ERCOT operates as part of 

the state’s broader electricity-regulation system under PURA and 

performs the uniquely governmental function of utilities regulation. 

PURA was enacted “to establish a comprehensive and adequate 

regulatory system for public utilities”, including electric utilities and 

telecommunications utilities.48 Under PURA, the PUC—a governmental 

entity—was given the “general power” to regulate and supervise public 

utilities.49 Within this larger governmental system of utilities regulation 

is the express requirement of an independent system operator for the 

Texas power region.50 This ISO is tasked with ensuring that (1) all 

electricity buyers and sellers have nondiscriminatory access to the 

region’s transmission and distribution system, (2) the region’s electrical 

47 Id. at 910, 911. 

48 TEX. UTIL. CODE § 11.002(a). 

49 Id. § 14.001; see also id. § 11.002(c). 

50 Id. § 39.151(a). 
14 

network is reliable and adequate, (3) information regarding a customer’s 

choice of retail electric provider is timely available to those who need it, 

and (4) electricity production and delivery are accurately accounted 

for.51

ERCOT performs these functions under the direct oversight of the 

PUC and must do so in compliance with the requirements set forth in 

PURA.52 In LTTS, we observed that the open-enrollment charter school 

was required to meet “financial, governing, and operational standards” 

under the Education Code and that the Commissioner of Education was 

empowered to audit the school and revoke its charter for failure to 

comply with the Code.53 ERCOT is subject to similar requirements and 

more under PURA and by the PUC. 

The PUC certifies the ISO, and, as the ISO, ERCOT is “directly 

responsible and accountable” to the PUC.54 The PUC has extensive 

authority over ERCOT, including “complete authority” over ERCOT’s 

“finances, budget, and operations”—including the ability to audit its 

financials—to ensure that ERCOT adequately performs its functions 

and duties.55 The PUC has authority over ERCOT’s bylaws and 

protocols, and the chairman of the PUC sits on ERCOT’s board.56 The 

PUC can penalize and even decertify ERCOT if it fails to adequately 

51 Id.

52 See id. § 39.151(d). 

53 342 S.W.3d at 80. 

54 TEX. UTIL. CODE § 39.151(d). 

55 Id. § 39.151(d), (d-4)(3); see also id. § 39.151(e). 

56 Id. § 39.151(g-1). 
15 

perform its functions and duties or if it fails to comply with PURA.57

Additionally, the regulation of utilities is “uniquely 

governmental”.58 As the certified ISO, ERCOT exercises delegated 

authority from the PUC to “adopt and enforce rules relating to the 

reliability of the regional electrical network”.59 It is also tasked with 

“enforc[ing] operating standards” and establishing and overseeing 

payment procedures for transactions by market participants within the 

electrical network.60 Market participants are statutorily required to 

abide by all rules and procedures established by the ISO, and their 

failure to do so could result in a penalty.61

Because ERCOT performs a “uniquely governmental” function as 

part of a “larger governmental system”, it is an organ of government.62 

2 

ERCOT also derives its “status and authority” from statute.63 Its 

status derives from statute because PURA requires the PUC to 

“establish one or more independent organizations”—that is, an 

57 Id. § 39.151(d), (d-4)(5). 

58 Redus I, 518 S.W.3d at 911; see Ark. Elec. Coop. Corp. v. Ark. Pub. 

Serv. Comm’n, 461 U.S. 375, 377 (1983) (“[T]he regulation of utilities is one of 

the most important of the functions traditionally associated with the police 

power of the States.”). 

59 TEX. UTIL. CODE § 39.151(d). 

60 Id. § 39.151(i). 

61 Id. § 39.151(j). 

62 Redus I, 518 S.W.3d at 910, 911. 

63 TEX. CIV. PRAC. & REM. CODE § 101.001(3); Redus I, 518 S.W.3d at 

907. 
16 

organization that is “sufficiently independent” of any electricity 

producer or seller—to serve as the region’s ISO.64 An independent 

organization can serve as the region’s ISO only if the PUC certifies it for 

that purpose.65 Its authority also comes from statute because PURA 

grants a certified ISO authority to supervise the Texas power region’s 

transmission facilities and to coordinate its market transactions, 

transmissions planning, and network reliability.66 Thus, although 

ERCOT is a private, nonprofit corporation, its “status” as the ISO for 

the Texas power region and its “authority” to act in that capacity derive 

directly from PURA. 

Because ERCOT is an “organ of government the status and 

authority of which are derived from” statute, it is a “governmental unit” 

entitled to take an interlocutory appeal from the denial of a plea to the 

jurisdiction.67

III 

The next issue, presented in both cases, is whether the PUC has 

exclusive jurisdiction over issues underlying the parties’ claims against 

ERCOT. We conclude that it does. 

Courts are presumed to have jurisdiction to resolve legal 

disputes.68 “To overcome that presumption, the Constitution or another 

64 TEX. UTIL. CODE § 39.151(a), (b). 

65 Id. § 39.151(c). 

66 Id. § 31.002(9); see also id. § 39.151. 

67 TEX. CIV. PRAC. & REM. CODE § 101.001(3); id. § 51.014(a)(8). 

68 Oncor Elec. Delivery Co. v. Chaparral Energy, LLC, 546 S.W.3d 133, 

138 (Tex. 2018) (citing In re Entergy Corp., 142 S.W.3d 316, 322 (Tex. 2004)); 
17 

law must grant exclusive jurisdiction to another court or an 

administrative agency.”69 A statute may grant an agency exclusive 

jurisdiction either expressly or by establishing a “pervasive regulatory 

scheme” that impliedly “indicates that the Legislature intended for the 

regulatory process to be the exclusive means of remedying the problem 

to which the regulation is addressed.”70 Thus, to establish exclusive 

jurisdiction over a particular issue, there must be (1) an express or 

implied grant of exclusive jurisdiction and (2) the issue must “fall[] 

within that jurisdictional scope.”71 If the agency’s exclusive jurisdiction 

is established, the claimant must pursue and exhaust all available 

administrative remedies before turning to the courts.72 “Until then, the 

trial court lacks subject-matter jurisdiction” and must dismiss the 

claims with issues that come within the agency’s exclusive jurisdiction.73

A 

ERCOT does not claim that the PUC has been expressly granted 

exclusive jurisdiction over the issues underlying CPS’ and Panda’s 

claims; rather, it argues that Section 39.151 of the Utilities Code 

see also TEX. CONST. art. V, § 8. 

69 Chaparral Energy, 546 S.W.3d at 138 (citing In re Sw. Bell Tel. Co., 

235 S.W.3d 619, 624-625 (Tex. 2007)). 

70 Id. (quoting In re Sw. Bell Tel. Co., 235 S.W.3d at 624-625). 

71 Id. at 139; see id. at 138. 

72 Forest Oil Corp. v. El Rucio Land & Cattle Co., 518 S.W.3d 422, 428 

(Tex. 2017). 

73 Id. (citing Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 

S.W.3d 212, 221 (Tex. 2002)). 
18 

constitutes a pervasive regulatory scheme that imparts exclusive 

jurisdiction. We agree. 

Section 39.151 grants the PUC extensive and ultimate authority 

over an ISO. As mentioned, the statute provides that the ISO “is directly 

responsible and accountable to the [PUC],” and the PUC “has complete

authority to oversee and investigate [ERCOT]’s finances, budget, and 

operations” to ensure adequate performance of the ISO’s “functions and 

duties.”74 It grants the PUC authority over ERCOT’s board makeup, its 

bylaws and protocols, and its ability to charge fees to its members.75

ERCOT is empowered to enact rules over market participants, but they 

must be approved by the PUC.76 Moreover, the PUC’s authority over 

ERCOT is not solely regulatory; it has adjudicatory power as well. The 

PUC may “take appropriate action” against the ISO, including 

decertification, for the ISO’s failure to adequately perform its functions 

or duties or for its failure to comply with Section 39.151.77

Section 39.151’s grant of extensive authority to the PUC over ERCOT 

and its detailed regulation of the particulars of ERCOT’s functions 

constitute a pervasive regulatory scheme.78 

74 TEX. UTIL. CODE § 39.151(d) (emphasis added). 

75 Id. § 39.151(d), (e), (g-1). 

76 Id. § 39.151(d); see also id. § 39.151(j). 

77 Id. § 39.151(d). 

78 Cf. In re Entergy Corp., 142 S.W.3d at 323 (“The Legislature’s 

description of PURA as ‘comprehensive,’ coupled with the fact that PURA 

regulates even the particulars of a utility’s operations and accounting, 

demonstrates the statute’s pervasiveness.”). 
19 

B 

The next inquiry is whether issues underlying the parties’ claims 

fall within the regulatory scheme’s jurisdictional scope.79 The question 

is whether “the Legislature intended . . . the regulatory process to be the 

exclusive means of remedying the problem to which the regulation is 

addressed.”80 As to both Panda and CPS, we conclude that the issues 

underlying their claims come within the scope of the PUC’s exclusive 

jurisdiction. 

1 

We begin with Panda’s issues. PURA requires that ERCOT 

publish CDRs that “identify[] existing and potential transmission and 

distribution constraints and system needs” within the Texas power 

region, including alternatives and recommendations for meeting those 

needs.81 Panda contends that ERCOT failed to properly perform this 

requirement by issuing fraudulent CDRs that inaccurately reported the 

capability of existing electric generation resources to meet projected 

demand in the Texas power region. Because the proper performance of 

ERCOT’s operations, functions, and duties comes within the PUC’s 

“complete” authority over ERCOT, and because the PUC is statutorily 

authorized to hold ERCOT accountable if, as Panda alleges, ERCOT 

fails to properly perform, we hold that Panda’s issues come within the 

79 See Chaparral Energy, 546 S.W.3d at 139. 

80 Id. at 138 (quoting In re Sw. Bell Tel. Co., 235 S.W.3d at 624-625). 

81 TEX. UTIL. CODE § 39.155(b); see also 16 TEX. ADMIN. CODE

§ 25.505(c). 
20 

PUC’s exclusive jurisdiction.82

Panda notes that the PUC “has no authority to determine 

whether ERCOT complied with the relevant common-law standards or 

to provide a remedy.” While that is true, an agency’s exclusive 

jurisdiction does not prevent an aggrieved party from pursuing damages 

or other relief in the trial court after the agency has exercised its 

exclusive jurisdiction over the relevant issues.83

2 

Likewise, CPS’ issues come within the jurisdictional scope of the 

PUC’s exclusive jurisdiction. CPS alleges that, inter alia, ERCOT “failed 

to implement its protocols in a way to ensure the integrity of its system”, 

“failed to take reasonable precautions to meet its load projections 

expected as a result of” Winter Storm Uri, “failed to take reasonable 

corrective action when it became clear that its own projections showed 

insufficient capacity to meet forecast demand”, and failed to correct “an 

acknowledged $16 billion error”. Additionally, CPS essentially seeks 

exemption from ERCOT’s short-pay and default-uplift procedures for 

charges relating to the Winter Storm default because it claims that they 

are due to ERCOT’s own error and its subsequent failure to retroactively 

reprice the alleged overcharge. 

These issues involve “the very activit[ies] the [PUC] regulates.”84

CPS’ issues implicate ERCOT’s operations and billing, which fall under 

82 TEX. UTIL. CODE § 39.151(d). 

83 See Chaparral Energy, 546 S.W.3d at 141-142. 

84 In re Oncor Elec. Delivery Co., 630 S.W.3d 40, 49 (Tex. 2021). 
21 

the PUC’s “complete authority”.85 And while ERCOT oversees 

transaction settlement payment procedures, it does so by delegated 

authority from the PUC.86 Additionally, CPS specifically alleged that 

ERCOT’s actions (and inactions) violated Section 39.151 of the Utilities 

Code because it failed to perform its functions of “ensur[ing] access to 

the transmission and distribution systems for all buyers and sellers of 

electricity” and “ensur[ing] the reliability and adequacy of the regional 

electrical network”.87 By statute, the PUC is responsible for ensuring 

that ERCOT “adequately performs [its] functions and duties”, and the 

PUC may take action against ERCOT should it fail to do so.88 Thus, CPS’ 

issues fall within the PUC’s exclusive jurisdiction. 

CPS raises a host of arguments to support its claim that the PUC 

does not have exclusive jurisdiction or that it is not required to exhaust 

administrative remedies. All fall short. CPS contends that the PUC does 

not have exclusive jurisdiction because it cannot adjudicate a contract 

claim or award damages. However, CPS’ claim for breach of the 

Standard Form Market Participant Agreement involves whether 

ERCOT properly implemented its protocols, which comes within the 

PUC’s exclusive jurisdiction.89 As to damages, as mentioned, an agency’s 

85 TEX. UTIL. CODE § 39.151(d). 

86 Id. § 39.151(i). 

87 Id. § 39.151(a)(1), (2). 

88 Id. § 39.151(d). 

89 See id. § 39.151(d) (“Rules adopted by an independent 

organization . . . under delegated authority from the [PUC] are subject to 

[PUC] oversight . . . .”); cf. Chaparral Energy, 546 S.W.3d at 139-140 (holding 
22 

exclusive jurisdiction does not prevent a party from pursuing damages 

or other relief in the trial court after it has exhausted administrative 

remedies.90 Moreover, CPS primarily argues that its damages stem from 

ERCOT’s alleged overcharge during the storm and its failure to 

retroactively reprice that overcharge. The PUC has authority to oversee 

transaction settlement procedures and authority over ERCOT’s 

finances; therefore, presumably, it could order ERCOT to resettle its 

payments to CPS.91

CPS argues that it was not required to exhaust administrative 

remedies because it needed immediate injunctive relief.92 But PUC rules 

permit the PUC to order ERCOT to suspend complained-of conduct 

while a complaint is pending.93 CPS also argues that exhaustion of 

administrative remedies is inapplicable where the action concerns 

questions of law. But CPS’ issues raise various fact questions including 

how much supply was available for the 32 hours after ERCOT recalled 

its firm load shed instructions, which is necessary to determine what the 

appropriate per-megawatt-hour price was. Thus, this exception to the 

that PUC had exclusive jurisdiction because the issue involved a public utility’s 

services, even though customer asserted a breach-of-contract claim for money 

damages). 

90 Chaparral Energy, 546 S.W.3d at 141-142. 

91 See TEX. UTIL. CODE § 39.151(d), (i). 

92 See Hous. Fed’n of Tchrs., Loc. 2415 v. Hous. Indep. Sch. Dist., 730 

S.W.2d 644, 646 (Tex. 1987). 

93 See 16 TEX. ADMIN. CODE § 22.251(i). 
23 

exhaustion requirement does not apply.94

Finally, CPS contends that exhaustion is not required because it 

asserts constitutional claims. Specifically, CPS argues that the loss 

allocation under the short-pay and default-uplift procedures amounts to 

an unconstitutional taking in violation of Article I, Section 17 of the 

Texas Constitution and an unconstitutional extension of credit in 

violation of Article XI, Section 3. However, “a litigant must avail itself 

of statutory remedies that may moot its takings claim, rather than 

directly institute a separate proceeding asserting such a claim.”95 Here, 

a decision from the PUC on the underlying issues could moot CPS’ 

constitutional claims. Were the PUC to order adjustment of the alleged 

overcharge pricing or resettlement of ERCOT’s payments to CPS, it 

would cure the alleged violations and obviate the need to assert the 

constitutional claims in court.96 And even if it does not, a party is not 

precluded from pursuing its constitutional claims after exhaustion or 

from seeking judicial review of any PUC rulings on issues underlying 

those claims.97

In sum, the PUC has exclusive jurisdiction over CPS’ claims. As 

a result of our holding, we need not address ERCOT’s alternative 

argument regarding exclusive jurisdiction in Travis County district 

94 Clint Indep. Sch. Dist. v. Marquez, 487 S.W.3d 538, 557-558 & n.13 

(Tex. 2016). 

95 Garcia v. City of Willis, 593 S.W.3d 201, 211 (Tex. 2019) (citing City 

of Dallas v. Stewart, 361 S.W.3d 562, 579 (Tex. 2012)). 

96 See id. at 211-212. 

97 Chaparral Energy, 546 S.W.3d at 141-142. 
24 

court or the Third Court of Appeals, nor its argument that the PUC is 

an indispensable party. 

IV 

ERCOT’s primary argument is that it is entitled to sovereign 

immunity. We agree. 

“Sovereign immunity provides that ‘no state can be sued in her 

own courts without her consent, and then only in the manner indicated 

by that consent.’”98 It is “‘inherent’ in Texas statehood and ‘developed 

without any legislative or constitutional enactment.’”99 In determining 

whether a legislatively authorized entity is entitled to share in the 

state’s immunity, we look to whether “the governing statutory authority 

demonstrates legislative intent to grant an entity the ‘nature, purposes, 

and powers’ of an ‘arm of the State government’”.100 We also look to 

whether extending immunity would “satisfy the political, pecuniary, and 

pragmatic policies underlying our immunity doctrines.”101 If these 

requirements are met, the “‘entity is a government unit unto itself’ and 

is ‘entitled to assert immunity in its own right’ when it performs a 

98 Univ. of the Incarnate Word v. Redus (Redus II), 602 S.W.3d 398, 403 

(Tex. 2020) (quoting Hosner v. DeYoung, 1 Tex. 764, 769 (1847)). 

99 Id. at 403-404 (quoting Wasson Ints., Ltd. v. City of Jacksonville, 489 

S.W.3d 427, 429, 431 (Tex. 2016)). 

100 El Paso Educ. Initiative, Inc. v. Amex Props., LLC, 602 S.W.3d 521, 

527 (Tex. 2020) (quoting Ben Bolt-Palito Blanco Consol. Indep. Sch. Dist. v. 

Tex. Pol. Subdivs. Prop./Cas. Joint Self-Ins. Fund, 212 S.W.3d 320, 325 (Tex. 

2006)). 

101 Rosenberg Dev. Corp. v. Imperial Performing Arts, Inc., 571 S.W.3d 

738, 750 (Tex. 2019). 
25 

‘governmental function.’”102

A 

Three of our recent cases explored the boundaries and contours of 

sovereign and governmental immunity and are pertinent to our analysis 

here. In Rosenberg Development Corp. v. Imperial Performing Arts, Inc., 

we addressed for the first time whether a private entity could possess 

the “nature, purposes, and powers of an arm of the State government” 

and thus qualify as an entity protected by sovereign or governmental 

immunity.103 Rosenberg involved an economic development corporation 

created by a municipality, as authorized by the Texas Development 

Corporation Act.104 The economic development corporation was a 

private, nonprofit entity, but it was incorporated exclusively for a public 

purpose: to promote enterprises to spur economic growth in the city.105

Under the statute, it was authorized to fund projects with tax dollars or 

the proceeds of revenue bonds.106 It was also subject to compliance with 

the Texas Open Meetings Act and the Texas Public Information Act.107

The municipality had some supervisory control over the corporation, but 

ultimately, “all the powers of the corporation [were] vested in the 

102 Redus II, 602 S.W.3d at 405 (quoting Ben Bolt, 212 S.W.3d at 325-

326). 

103 571 S.W.3d at 749 (internal quotation marks omitted). 

104 Id. at 741. 

105 Id. at 741, 745. 

106 Id. at 744. 

107 Id. at 745. 
26 

corporation’s board of directors.”108 Importantly, the Development 

Corporation Act provided that an economic development corporation “is 

not a political subdivision or a political corporation for purposes of the 

laws of this state”, and it barred municipalities from delegating to the 

corporation any “attributes of sovereignty.”109 Ultimately, we concluded 

that the Development Corporation Act “evinces clear legislative intent 

that an economic development corporation is not an arm of state 

government.”110 We also held that granting immunity did not “satisfy 

the political, pecuniary, and pragmatic policies underlying our 

immunity doctrines” because “[g]overnmental immunity benefits the 

public by preventing disruptions of key governmental services,” but 

economic development corporations do not perform essential services.111

Next, in University of the Incarnate Word v. Redus (Redus II), we 

considered whether sovereign immunity applied to the private 

university involved in Redus I, which was sued for the actions of its 

statutorily authorized police department.112 We concluded that it was 

not immune because the university did not possess the nature, purposes, 

and powers of an arm of the state government, nor did applying 

sovereign immunity support the doctrine’s nature and purposes.113

Central to our holding was the lack of control the state exercised over 

108 Id. (internal alterations and quotation marks omitted). 

109 Id.

110 Id. at 750. 

111 Id.

112 See Redus II, 602 S.W.3d at 401-402. 

113 See id.
27 

the university and its police department. We noted that “[t]he State did 

not charter” the university, nor did it set the police “department’s 

policies, procedures, or protocols.”114 We further observed that the state 

did not “hire or fire the [u]niversity’s officers” and that “[t]he 

[u]niversity’s administration, and its private governing board, are alone 

responsible for its police department’s day-to-day operations and 

decision making.”115 Ultimately, because the university’s police 

department was “not accountable to the government,” we concluded that 

it was not an arm of the state.116 We also held that extending sovereign 

immunity to the university did not further the doctrine’s purposes of 

protecting the public treasury and preserving the separation of 

government power.117 We observed that the university, not the state, 

funded the police department, and therefore no tax dollars were at 

stake.118 This foreclosed any risk of invading the separation of powers 

because there could be no judicial reallocation of public funds.119

Additionally, there were no concerns regarding the diversion of public 

funds from government functions in order to pay judgments.120

On the same day we decided Redus II, we also decided El Paso 

Education Initiative v. Amex Properties, issuing the first and only 

114 Id. at 407; see id. at 407-408. 

115 Id. at 407. 

116 Id. at 408. 

117 Id. at 409. 

118 Id.

119 Id.

120 Id. at 409-410. 
28 

opinion in which we have extended sovereign or governmental immunity 

to a private entity under the arm-of-the-state analysis.121 We observed 

that the Education Code expressly stated the Legislature’s intent that 

open-enrollment charter schools be “immune from liability and suit to 

the same extent as a [public] school district”.122 We concluded that, 

although charter schools are typically private, non-profit organizations, 

they have the nature, purposes, and powers of an arm of the state 

because they are regulated by and accountable to the state’s 

Commissioner of Education, are largely publicly funded, educate nearly 

six percent of the state’s students, “exercise the same powers and 

perform government tasks in the same manner as traditional public 

schools[,] . . . expressly operate as part of the State’s public education 

system, and . . . are generally open to the public.”123 We also concluded 

that extending governmental immunity to open-enrollment charter 

schools would serve the doctrine’s nature and purposes by protecting 

public funds from lawsuits and judgments that would reallocate the 

funds from the Legislature’s designated purpose.124 It would also protect 

the separation of governmental powers by respecting the Legislature’s 

policy choices on how to provide and fund a free, public education, as 

well as its express desire that charter schools have the same 

governmental immunity from suit and liability as public schools.125 

121 602 S.W.3d at 529-530. 

122 Id. at 529. 

123 Id. at 528-530. 

124 Id. at 530. 

125 Id.
29 

B 

ERCOT “do[es] not fall neatly into any camp”.126 It is a unique 

entity serving a role that is not clearly analogous to a public entity like 

a police department or a public school. Yet, it provides an essential 

governmental service. While the Legislature has not expressly stated a 

desire that ERCOT be immune from suit, as it did in Amex Properties, 

the “the governing statutory authority”—PURA—nevertheless 

“demonstrates legislative intent to grant [ERCOT] the ‘nature, 

purposes, and powers’ of an ‘arm of the State government’”.127 ERCOT 

operates under the direct control and oversight of the PUC, it performs 

the governmental function of utilities regulation, and it possesses the 

power to adopt and enforce rules pursuant to that role. In addition, 

recognizing immunity satisfies the “political, pecuniary, and pragmatic 

policies” underlying immunity because it prevents the disruption of key 

governmental services, protects public funds, and respects separation of 

powers principles.128 Thus, ERCOT is immune from suit. 

ERCOT’s governmental nature is demonstrated most 

prominently by the level of control and authority the state exercises over 

it and its accountability to the state. In this regard, it is much like a 

state agency, and it stands in stark contrast to the private university in 

Redus II. The PUC certified ERCOT as the ISO, and, as set forth in 

Section 39.151 of the Utilities Code, it has “complete authority” over 

126 Redus II, 602 S.W.3d at 406. 

127 Amex Props., 602 S.W.3d at 527 (quoting Ben Bolt, 212 S.W.3d at 

325). 

128 Rosenberg, 571 S.W.3d at 750. 
30 

ERCOT’s operations.129 In other words, the state has complete authority 

over everything ERCOT does to perform its statutory functions. The 

statute also grants the PUC authority over ERCOT’s governance. 

ERCOT’s bylaws and protocols are subject to PUC approval, and they 

“must reflect the input of the [PUC].”130 While ERCOT has a board of 

directors, the state controls that too. Specifically, under Section 39.151, 

ERCOT’s “governing body must be composed of [eight] persons selected 

by the ERCOT board selection committee.”131 In turn, the board 

selection committee comprises members appointed by the three highest 

ranking officials in state government: the Governor, the Lieutenant 

Governor, and the Speaker of the House of Representatives.132 In 

addition to the members selected by the committee, the board also 

includes two state officials, the Chairman of the PUC and the Counsellor 

of the Public Utility Counsel.133 The final member of the board is 

ERCOT’s CEO, whose selection is subject to PUC review and 

approval.134

Section 39.151 also grants the PUC “complete authority” over 

129 TEX. UTIL. CODE § 39.151(d). 

130 Id. § 39.151(g-1). 

131 Id. § 39.151(g), (g-1). 

132 Id. § 39.1513. 

133 Id. § 39.151(g-1). Under the recent amendments to Section 39.151, 

the PUC must have two commissioners on the ISO’s board, the presiding officer 

of the PUC and one other commissioner who will serve a one-year term. See

Act of May 28, 2023, supra note 16. 

134 TEX. UTIL. CODE § 39.151(g-1); 16 TEX. ADMIN. CODE § 25.362(h). 
31 

ERCOT’s finances and budget.135 ERCOT must submit its proposed 

annual budget to the PUC, which can “approve, disapprove, or modify 

any item” in it.136 ERCOT is authorized to charge a system 

administration fee, but only after the PUC approves its budget and sets 

the fee range.137 ERCOT must provide the PUC with reports that 

compare its actual expenditures with its budgeted expenditures, and the 

PUC is authorized to audit ERCOT’s finances.138

In addition to the control the PUC exercises over ERCOT, 

Section 39.151(d) holds that ERCOT is “directly responsible and 

accountable to the [PUC]”.139 In Amex Properties, the open-enrollment 

charter school was entitled to governmental immunity in part because 

it “must adhere to state law and the [Commissioner of Education]’s 

regulations . . . or risk revocation of its charter.”140 Here, the PUC is 

empowered to “take appropriate action against” ERCOT if it fails to 

adequately perform or adhere to the requirements set forth in 

Section 39.151, “including decertifying the organization or assessing an 

administrative penalty against the organization.”141 And should the 

PUC decide to decertify ERCOT, the statute requires that ERCOT 

“transfer[] [its] assets to the successor organization to ensure continuity 

135 TEX. UTIL. CODE § 39.151(d). 

136 Id. § 39.151(d-1). 

137 Id. § 39.151(e). 

138 Id. § 39.151(d-4)(3), (e). 

139 Id. § 39.151(d). 

140 602 S.W.3d at 529. 

141 TEX. UTIL. CODE § 39.151(d). 
32 

of operations in the region”, demonstrating the state’s control and 

ownership of ERCOT’s property.142 

Finally, ERCOT is subject to requirements typically reserved for 

state entities. For example, among other things, ERCOT is subject to 

review (but not abolishment) under the Texas Sunset Act, and it is 

required to open its board meetings to the public.143 While these 

requirements are not dispositive—the economic development 

corporation in Rosenberg was also subject to open meetings144—when 

coupled with the state’s control, they further support ERCOT’s 

governmental nature. 

The dissent argues that these statutory provisions are 

insufficient to show that ERCOT has been vested with the nature of an 

arm of the government.145 Specifically, it argues that ERCOT would not 

be immune for discretionary and independent actions, and that a factual 

showing of actual control by the PUC of the complained-of conduct is 

necessary to determine whether ERCOT’s actions were attributable to 

the government such that it shares in the state’s immunity.146 The 

dissent would wait to resolve the immunity question until after the PUC 

exercised its exclusive jurisdiction.147 To come to this conclusion, the 

dissent relies heavily on cases involving derivative immunity for 

142 Id.

143 Id. §§ 39.151(n), 39.1511. 

144 571 S.W.3d at 745. 

145 See post at 7 (Boyd & Devine, JJ., dissenting). 

146 Id. at 25-27, 34-43. 

147 Id. at 26. 
33 

government contractors.148 However, this reliance is misplaced. ERCOT 

is not a government contractor; it is an “[e]ssential [o]rganization[]” 

certified by the PUC pursuant to statute, and its argument for immunity 

is as an arm of the state, not derivative of the state.149 In Redus II, we 

noted that a derivative immunity case, Brown & Gay Engineering, Inc. 

v. Olivares,150 was “instructive” in holding that no control by or 

accountability to the state precludes arm-of-the-state immunity, but we 

have never held that a complete lack of discretion is required for 

immunity in an arm-of-the-state analysis for a legislatively authorized 

entity.151 “Sovereign immunity is entity-based.”152 Our immunity 

inquiry looks to legislative intent, and Section 39.151’s numerous 

provisions outlining the PUC’s ultimate authority over ERCOT’s 

operations, budget, governance, and property demonstrate the intent to 

vest ERCOT with the nature of an arm of the state independently of the 

PUC’s actions on a given day.153 

Moreover, the PUC had significant control and authority over the 

148 Id. at 30-43. 

149 TEX. UTIL. CODE § 39.151; id. § 39.151(c). 

150 461 S.W.3d 117, 125 (Tex. 2015). 

151 Redus II, 602 S.W.3d at 407; see Amex Props., 602 S.W.3d at 529-

530. 

152 Redus II, 602 S.W.3d at 407. 

153 See, e.g., Amex Props., 602 S.W.3d at 527 (noting that we look to the 

“governing statutory authority”). The dissent also takes issue with the fact that 

PURA does not directly address ERCOT, but instead regulates the ISO. See 

post at 22-25 (Boyd & Devine, JJ., dissenting). But ERCOT is the ISO for the 

Texas power region and is, therefore, subject to PURA while it serves in that 

role. 
34 

very conduct at issue in these cases. In CPS’ case, the PUC issued the 

directive to ERCOT to increase pricing to $9,000 per megawatt-hour 

that resulted in CPS’ alleged overcharge. The short-pay procedure and 

default-uplift process of which CPS complains are set forth in the 

ERCOT Protocols, and the Protocols are subject to PUC approval.154

Finally, ERCOT’s ability to conduct transaction settlements is through 

delegated authority from the PUC.155 As to Panda, ERCOT is required 

by the PUC to publish CDRs, and those CDRs allegedly caused Panda’s 

injury.156 Panda conceded at oral argument that the PUC could have 

controlled the CDR data output had it wanted to. 

PURA also evinces a legislative intent to vest ERCOT with the 

“purposes” and “powers” of an “arm of the State government.”157 PURA 

requires the PUC to certify an “[e]ssential [o]rganization[]” to operate a 

competitive electric market and to ensure “the reliability and adequacy” 

of the grid.158 In this role, ERCOT regulates the electric utility market. 

It is statutorily authorized to establish, adopt, and enforce a variety of 

policies, rules, guidelines, standards, procedures, protocols, and other 

requirements to govern the operations of market participants.159 And 

154 TEX. UTIL. CODE § 39.151(d), (g-1). 

155 Id. § 39.151(i). 

156 Id. § 39.155; 16 TEX. ADMIN. CODE § 25.505. 

157 Amex Props., 602 S.W.3d at 527 (quoting Ben Bolt, 212 S.W.3d at 

325). 

158 TEX. UTIL. CODE § 39.151; id. § 39.151(a). 

159 Id. § 39.151(d), (i), (j), (l). 
35 

market participants are statutorily obligated to abide by these rules.160

This regulatory role over utilities is uniquely governmental.161 

The fact that ERCOT is organized as a membership-based 

nonprofit corporation does not make it any less an arm of the state.162

An entity’s organizational form is not dispositive.163 While corporations 

do not typically enjoy sovereign immunity, ERCOT is not a typical 

corporation. Apart from limited liability, one of the hallmarks of a 

corporation is management by a board of directors in accordance with 

corporate bylaws.164 But here, the state has authority over both 

ERCOT’s board and its bylaws.165 Under Texas law, corporations have 

the power to, inter alia, own property, dispose of property, spend money, 

incur liabilities, and conduct their business.166 However, ERCOT may 

not exercise any of those corporate powers independently of the state. 

ERCOT’s assets are owned by the state.167 ERCOT may not raise money, 

spend money, or obtain debt financing without PUC input and 

approval.168 The “business” ERCOT conducts is governmental and for 

the public benefit, and it is set forth by statute and subject to PUC 

160 Id. § 39.151(j). 

161 See Ark. Elec. Coop. Corp., 461 U.S. at 377. 

162 ERCOT Organization Backgrounder, supra note 7. 

163 See Amex Props., 602 S.W.3d at 528-529. 

164 TEX. BUS. ORGS. CODE §§ 22.102, 22.152, 22.201. 

165 See TEX. UTIL. CODE § 39.151(g), (g-1); id. § 39.1513. 

166 See TEX. BUS. ORGS. CODE § 2.101(3), (4), (6), (7), (12), (22). 

167 See TEX. UTIL. CODE § 39.151(d). 

168 See id. § 39.151(d), (d-1), (d-2). 
36 

authority and oversight.169 In short, the fact that the state is utilizing 

the corporate form to achieve its objectives for the Texas power region 

does not change governmental nature of ERCOT’s actions.170 

In sum, “the governing statutory authority demonstrates 

legislative intent to grant [ERCOT] the ‘nature, purposes, and powers’ 

of an ‘arm of the State government’”.171

C 

Recognizing ERCOT’s immunity also satisfies the “political, 

pecuniary, and pragmatic policies underlying our immunity 

doctrines.”172 “Governmental immunity benefits the public by 

preventing disruptions of key governmental services,” and there are few 

things more fundamental to the state’s ability to function than its 

169 See id. § 39.151(a), (c), (d); see also id. § 39.001(a). 

170 Relying on a recent Fifth Circuit concurring opinion, see

Springboards to Educ., Inc. v. McAllen Indep. Sch. Dist., 62 F.4th 174, 187-199 

(5th Cir. 2023) (Oldham, J., concurring), the dissent contends that “there is no 

history or tradition of extending common-law sovereign immunity to private 

corporations.” Post at 27 (Boyd & Devine, JJ., dissenting). We need not express 

any opinion on the correctness of that proposition today. But even assuming 

that it is correct, it does not address circumstances (like here) in which the 

state has exercised direct control over the corporation and has harnessed it for 

state-related objectives. Indeed, the U.S. Supreme Court has long recognized 

that the government cannot, for example, circumvent the state-action 

requirement by simply enlisting private entities to do its work. See, e.g., 

Skinner v. Ry. Lab. Execs.’ Ass’n, 489 U.S. 602, 614 (1989). While a corporation 

is presumably not “the state”, we reiterate that an entity’s corporate form 

cannot in and of itself be dispositive of the immunity question. 

171 Amex Props., 602 S.W.3d at 527 (quoting Ben Bolt, 212 S.W.3d at 

325). 

172 Rosenberg, 571 S.W.3d at 750. 
37 

electricity grid.173 

The protection of public funds and assets justifies recognizing 

ERCOT’s immunity. Even though ERCOT is not funded with tax dollars, 

any damages payments would nevertheless come from the state and the 

public. ERCOT is primarily funded by a system administration fee 

charged to wholesale buyers and sellers of electricity.174 The fee is 

required to closely match the revenue necessary for its budget without 

exceeding it to avoid a surplus of funds.175 In other words, ERCOT 

charges only what is necessary for it to function. Were a judgment 

rendered against it, ERCOT would be forced to raise the system 

administration fee to pay the judgment—assuming the PUC would 

authorize that176—resulting in higher costs for electricity for consumers. 

Moreover, the Legislature appears to consider ERCOT’s money 

and assets to be state assets. The system administration fee is 

statutorily authorized, subject to PUC approval, and collected pursuant 

to state power.177 As mentioned, the PUC has authority over ERCOT’s 

finances, including its ability to raise money and how it spends its 

money.178 And were ERCOT to be decertified as the ISO, 

Section 39.151(d) requires that ERCOT “transfer[] [its] assets to the 

173 Id.

174 TEX. UTIL. CODE § 39.151(e). 

175 Id.

176 See id. § 39.151(d), (d-1). 

177 Id. § 39.151(e), (j). 

178 See id. § 39.151(d), (d-1), (e). 
38 

successor organization”.179 The state’s ability to divest ERCOT of those 

assets and direct their transfer demonstrates the state’s ownership over 

them. Thus, were the assets subject to judicial seizure, the judgment 

creditor would be the state—not ERCOT. 

Finally, recognizing ERCOT’s immunity respects separation of 

powers principles. The judicial imposition of a damages award against 

ERCOT would run afoul of the Legislature’s determination that the PUC 

alone has “complete authority” over ERCOT’s finances.180 This directive 

necessarily prevents the courts from enforcing a monetary judgment 

against it. 

Contrary to the dissent’s claim, this does not leave ERCOT 

unaccountable.181 It simply holds that the courts are not the proper 

avenue for redress. ERCOT is accountable to the state. Its shortfalls are 

being addressed by the Legislature, which is accountable to the people 

through the political process.182 For example, in direct response to the 

default of certain ERCOT market participants following Uri, the 

Legislature passed a bill authorizing the use of $800 million of the Rainy 

Day Fund for ERCOT to finance part of the default.183 This helps ensure 

179 Id. § 39.151(d). 

180 Id.

181 See post at 39-40, 51 (Boyd & Devine, JJ., dissenting). 

182 See In re Stetson Renewables Holdings, LLC, 658 S.W.3d 292, 297 

(Tex. 2022) (observing various ways in which the Legislature could hold an 

agency accountable for the failure to carry out a statutory program and 

reasoning that a judicial remedy could “create[] a serious risk that the courts 

will intrude into the prerogatives of [the] other branches”). 

183 See Act of May 30, 2021, 87th Leg., R.S., ch. 908, §§ 1, 5, 2021 Tex. 
39 

that short-paid market participants like CPS are repaid faster.184 After 

the storm, the Legislature overhauled ERCOT’s board of directors, 

making it more independent from electric-market stakeholders and 

further increasing governmental oversight.185 It also passed an omnibus 

bill that required, among other things, weatherization of generation 

companies’ and electric utilities’ assets and gave ERCOT authority to 

inspect for compliance.186 And it moved up ERCOT’s Sunset date by two 

years, which ensured a comprehensive review of the organization in the 

near-term.187

We hold that ERCOT is entitled to sovereign immunity because 

PURA “evinces clear legislative intent”188 to vest it with the “‘nature, 

Gen. Laws 2218, 2218-2227 (H.B. 4492) (codified at TEX. GOV’T CODE

§ 404.0241, TEX. UTIL. CODE §§ 39.601-39.609); see also SUNSET ADVISORY 

COMMISSION, STAFF REPORT WITH COMMISSION DECISIONS: PUBLIC UTILITY 

COMMISSION OF TEXAS, ELECTRIC RELIABILITY COUNCIL OF TEXAS, OFFICE OF 

PUBLIC UTILITY COUNSEL 106-107 (2023), 

https://www.ercot.com/files/docs/2023/01/20/PUC-ERCOT-OPUC-StaffReport-with-Commission-Decisions_1-19-23.pdf. 

184 See TEX. UTIL. CODE § 39.601(b)(1). 

185 Act of May 30, 2021, 87th Leg., R.S., ch. 425, §§ 3, 4, 2021 Tex. Gen. 

Laws 830, 830-833 (S.B. 2) (codified at TEX. UTIL. CODE §§ 39.151, 39.1513); 

see also SUNSET ADVISORY COMMISSION, supra note 183 at 1 (“In response to 

the disaster, the Legislature took swift action, completely overhauling PUC’s 

and ERCOT’s governance structures and making numerous changes to the 

electric industry and market . . . .”); id. at 106. 

186 Act of May 30, 2021, 87th Leg., R.S., ch. 426, §§ 13, 16, 2021 Tex. 

Gen. Laws 833, 839-840, 841-843 (S.B. 3) (codified at TEX. UTIL. CODE

§§ 35.0021, 38.075); see also 16 TEX. ADMIN. CODE § 25.55(b)(5), (d), (g); 

SUNSET ADVISORY COMMISSION, supra note 183, at 106. 

187 SUNSET ADVISORY COMMISSION, supra note 183, at A1. 

188 Rosenberg, 571 S.W.3d at 750. 
40 

purposes, and powers’ of an ‘arm of the State government’”189 and 

because doing so satisfies the “political, pecuniary, and pragmatic 

policies underlying our immunity doctrines.”190 There is no evidence 

that ERCOT performs any functions outside its role as the ISO, but we 

note that ERCOT would not be immune outside that role. We also note 

that immunity would not bar CPS’ constitutional claims.191 Because we 

conclude that ERCOT enjoys sovereign immunity as an arm of the state, 

we need not and do not address ERCOT’s argument that it is entitled to 

derivative immunity. 

* * * * * 

In No. 22-0056, CPS Energy v. Electric Reliability Council of 

Texas, we affirm the court of appeals’ judgment. CPS’ motion to stay the 

court of appeals’ dissolution of the trial court’s temporary restraining 

order is dismissed as moot. In No. 22-0196, Electric Reliability Council 

of Texas, Inc. v. Panda Power Generation Infrastructure Fund, LLC, we 

reverse the court of appeals’ judgment and dismiss the case for lack of 

jurisdiction. 

 

 Nathan L. Hecht 

 Chief Justice 

OPINION DELIVERED: June 23, 2023 

189 Amex Props., 602 S.W.3d at 527 (quoting Ben Bolt, 212 S.W.3d at 

325). 

190 Rosenberg, 571 S.W.3d at 750. 

191 See City of El Paso v. Heinrich, 284 S.W.3d 366, 372 (Tex. 2009).