ERCOT is having insurance problems

Damaged properties from the February ice storm are eligible for a new catastrophe exemption, which will lower their property value appraisals—and their owners' tax bills—this year.

In a press release, Harris County Appraisal District chief appraiser Roland Altinger said, "I want to remind everyone that the temporary disaster exemption is available to benefit property owners who had physical damage to their property due to Winter Storm Uri." "Since Hurricane Harvey, a change in state law has allowed individual property owners to qualify for a temporary disaster exemption for property damage. However, the property owner must apply the application by a certain date, and that date is quickly approaching."

The disaster exemption is available to qualifying properties that sustain damage totaling at least 15% of their value due to a governor-declared disaster. Real estate, such as houses and offices, and manufactured homes and personal property used in a business are included. The chief appraiser may grant a harm rating and a corresponding exemption percentage to properties that request the exemption.

HCAD had issued just about 150 applications for the exemption as of March 31.

ERCOT is having insurance issues

ERCOT's insurance firm requests a court order exempting it from defending Texas' electric grid manager in litigation or paying for losses related to the February power outage.

The Cincinnati Insurance Co. filed a motion in federal court in Austin on Tuesday, claiming that it is not obligated to defend the Electric Reliability Council of Texas because it does not consider the power outages to be an accident, which the insurer defines as a "fortuitous, unforeseen, and unintentional occurrence." As a result, the firm claims it is under no duty under its insurance policies to compensate ERCOT, which is facing a barrage of litigation due to the winter storm.

"The claims in the Underlying Lawsuits allege that ERCOT either knew, should have known, predicted, and planned that Winter Storm Uri would cause the same power outages as previous storms in Texas, including storms in 1989 and 2011," the insurer wrote in court papers. "The Underlying Lawsuits allege that the same failures caused the power outages caused by Winter Storm Uri as previous winter storms, including failures of the same generators, and that the power outages were thereby foreseeable, anticipated, or intended."

After extended blackouts during the winter storm killed over 200 people, leftover 4 million Texans without electricity, and caused billions in property damage, ERCOT is facing a barrage of litigation. ERCOT faces millions of dollars in settlements or fees from victims and their families if it does not have insurance coverage.

Family members of those who died during the blackouts have filed lawsuits against ERCOT, alleging that the utility neglected to prepare the grid for freezing temperatures correctly. It was aware of the dangers that ice and extreme cold posed to the grid. ERCOT's actions were "intentional and knowing," according to many lawsuits.

A request for comment from ERCOT on Thursday was not returned.

The insurer, according to ERCOT's insurance policy with Cincinnati Insurance, "shall compensate those amounts that the insured becomes legally liable to pay as damages because of 'bodily harm' or 'property damage' to which this insurance refers." We would have the right and obligation to protect the insured against any "suit" for such damages.'

On the other hand, Cincinnati Insurance has no obligation to protect ERCOT in situations where the insurance policy does not apply, and it reserves the right to investigate any "occurrence" and resolve any allegation or litigation that arises from it, according to the policy. "An event, involving continuous or prolonged exposure to substantially the same general harmful conditions," the insurer describes "occurrence."

The filing by Cincinnati Insurance comes less than a month after the Texas Supreme Court declined to rule on whether ERCOT is a federal entity entitled to sovereign immunity from litigation. The only grid manager in the country with such protection is ERCOT, a private, nonprofit organization overseen by the Texas Legislature and the Public Utility Commission.

In March, the state's supreme court ruled 5-4 that it will not hear a closely watched case between Dallas electricity generator Panda Power and ERCOT, raising concerns about ERCOT's sovereign immunity. The majority concluded that the Texas Constitution forbids the Supreme Court from deciding on the case until the trial court has reached a final judgment rejecting it, rendering the case moot.

As appeals from the Panda Power case move through the judicial system, the Supreme Court may also rule on ERCOT's immunity.

The rulings in the Panda Power and Cincinnati Insurance cases would have far-reaching consequences for ERCOT, which is facing a slew of lawsuits, including one over the deaths of an 11-year-old boy and a 95-year-old man, who were both discovered dead in their freezing Houston homes.

During the power outage last month, more than 4.5 million Texans were without power for days, including 1.4 million CenterPoint customers in the Houston area. Water infrastructure collapsed, food spoilt, and water pipes froze and burst during the rolling blackouts, causing billions of dollars in property damage.

According to a review of reports from medical examiners, justices of the peace, and the Department of State Health Services, the blackouts have been related to nearly 200 deaths nationwide, including at least 90 deaths in the Houston area. People sought warmth indoors by operating cars, portable generators, and barbecue grills, resulting in fatalities from prolonged exposure to freezing temperatures, loss of vital medical equipment, and carbon monoxide poisoning.