FIA has filed an amicus brief with the Supreme Court of Texas in the case of Public Utility Commission of Texas v. Luminant Energy Company, stressing the importance of finality of settlement and price discovery in Texas’ wholesale electricity and related derivatives markets.
The case is born out of 2021 Winter Storm Uri that disrupted Texas electricity supply and demand, leading to significantly higher prices in the wholesale markets. FIA’s "friend of the court" brief argued that a lower court ruling that could cause the Public Utility Commission to have to re-price and re-settle certain electricity market transactions in 2021 would have significant negative impacts on Texas' electricity markets, and ultimately harm Texas businesses and consumers.
In addition, FIA noted that undermining settlement prices of wholesale electricity contracts would sever a critically important link between the prices of electricity contracts in regulated Texas markets and the prices of related listed and OTC derivatives contracts. This could disrupt market participants' hedging activity and lead to increased energy costs across Texas as participants lose trust in the integrity of local electricity markets.
