Public Utility Commission of Texas v. Luminant Energy Company LLC

Supreme Court of Texas
══════════
No. 23-0231
══════════

Public Utility Commission of Texas,
Petitioner,

v.

Luminant Energy Company LLC,
Respondent

═══════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Third District of Texas
═══════════════════════════════════════

Argued January 30, 2024

CHIEF JUSTICE HECHT delivered the opinion of the Court.

Justice Huddle and Justice Young did not participate in the
decision.

During Winter Storm Uri, with the Texas electric grid on the
brink of collapse, the Public Utility Commission issued two orders, the
effect of which was to raise the market price of electricity to the
regulatory ceiling of $9,000/MWh 1 to reflect the scarcity of supply,

1 MWh is an abbreviation for megawatt hour, which is a unit of energy.
thereby incentivizing generators capable of adding supply to do so and
large industrial users to reduce their demand. Some market
participants went bankrupt. Litigation ensued. 2
In this case, the court of appeals held that the Commission’s
orders exceeded its authority under Chapter 39 of the Public Utility
Regulatory Act (PURA) because the statute prohibits price-setting. 3 We
disagree. We also hold that the Commission substantially complied with
the Administrative Procedure Act’s (APA) procedural rulemaking
requirements, an issue the court of appeals did not reach. We reverse
the judgment of the court of appeals and render judgment affirming the
orders. 4
I
A
The Legislature added Chapter 39 to PURA in 1999 as part of
Texas’ transition to a competitive retail electric market. 5 Though its
provisions are wide-ranging, only a few are at issue here. Among
subchapter A’s “General Provisions” is Section 39.001, which includes

2 See Pub. Util. Comm’n of Tex. v. RWE Renewables Ams., LLC, ___

S.W.3d ___ (Tex. June 14, 2024) (No. 23-0555); CPS Energy v. Elec. Reliability
Council of Tex., 671 S.W.3d 605 (Tex. 2023).
3 665 S.W.3d 166, 191-192 (Tex. App.—Austin 2023).

4 See TEX. R. APP. P. 60.2(c) (“The Supreme Court may . . . reverse the

lower court’s judgment in whole or in part and render the judgment that the
lower court should have rendered[.]”); TEX. UTIL. CODE § 39.001(f) (“The court
of appeals shall render judgment affirming the rule or reversing . . . . The
Texas Rules of Appellate Procedure apply to an appeal brought under this
section to the extent not inconsistent with this section.”).
5 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).

2
several statements of “Legislative Policy and Purpose”. There, in
subsection (a), the Legislature states its finding that “the public interest
in competitive electric markets requires”, with some exceptions, that
“electric services and their prices should be determined by customer
choices and the normal forces of competition.” 6 Continuing that theme,
subsection (d) states that “[r]egulatory authorities . . . shall authorize or
order competitive rather than regulatory methods to achieve the goals
of this chapter to the greatest extent feasible and shall adopt rules and
issue orders that are both practical and limited so as to impose the least
impact on competition.” 7
Subsections (c), (e), and (f) address rules. Subsection (c) prohibits
regulatory authorities from “mak[ing] rules or issu[ing] orders
regulating competitive electric services, prices, or competitors or
restricting or conditioning competition except as authorized in this
title”. 8 Subsections (e) and (f) authorize “[j]udicial review of competition
rules” 9—a concept we return to later—and set out the procedure for
initiating such review directly in the court of appeals. 10
The other provisions at issue are in subchapter D, which

6 TEX. UTIL. CODE § 39.001(a).

7 Id. § 39.001(d).

8 Id. § 39.001(c).

9 Id. § 39.001(e).

10 Id. § 39.001(e)-(f). When Luminant filed its suit for judicial review,

Section 39.001(e) provided for review in the Third Court of Appeals. In 2023,
the Legislature amended Section 39.001(e) to provide for review by the
Fifteenth Court of Appeals going forward. Act of May 21, 2023, 88th Leg., R.S.,
ch. 459, § 1.13, 2023 Tex. Gen. Laws ___.

3
addresses “Market Structure”. Section 39.151(c) requires the
Commission to “certify an independent organization”—here, ERCOT 11—
“to perform the functions prescribed by this section.” 12 Four functions
are listed in subsection (a). The second is “ensur[ing] the reliability and
adequacy of the regional electrical network”. 13 The fourth is “ensur[ing]
that electricity production and delivery are accurately accounted for
among the generators and wholesale buyers and sellers in the region.” 14
Section 39.151(d) sets out the Commission’s oversight of ERCOT.
“The commission shall adopt and enforce rules relating to the reliability
of the regional electrical network and accounting for the production and
delivery of electricity among generators”, or it may delegate that
responsibility to ERCOT. 15 ERCOT “is directly responsible and
accountable to the commission”, which “has complete authority to
oversee and investigate [ERCOT’s] finances, budget, and operations as
necessary to ensure the organization’s accountability and to ensure that
the organization adequately performs the organization’s functions and

11 See CPS Energy, 671 S.W.3d at 611-612 (giving the history of
ERCOT).
12 TEX. UTIL. CODE § 39.151(c).

13 Id. § 39.151(a)(2).

14 Id. § 39.151(a)(4). The others are “ensur[ing] access to the
transmission and distribution systems for all buyers and sellers of electricity
on nondiscriminatory terms”, id. § 39.151(a)(1), and “ensur[ing] that
information relating to a customer’s choice of retail electric provider is
conveyed in a timely manner to the persons who need that information”, id.
§ 39.151(a)(3).
15 Id. § 39.151(d).

4
duties.” 16 If ERCOT “does not adequately perform [its] functions or
duties or does not comply with this section,” the Commission can “take
appropriate action”, including decertification. 17
B
As set out above, two of ERCOT’s statutory duties are ensuring
the adequacy and reliability of the electric grid and ensuring that
electricity production and delivery are accurately accounted for among
the generators and wholesale buyers and sellers in the region. 18
Relatedly, the Commission is charged with making rules addressing
those duties or delegating the rulemaking responsibility to ERCOT, over
which the Commission has complete authority. 19 Under the
Commission’s rules, “ERCOT shall determine the market clearing prices
of energy”, “[e]xcept as otherwise directed by the commission”. 20 “The
protocols and other rules” adopted by ERCOT “shall promote economic
efficiency in the production and consumption of electricity; support
wholesale and retail competition; support the reliability of electric
service; and reflect the physical realities of the ERCOT electric
system.” 21
Texas maintains an “energy only” market in which generators are
compensated only for the energy they actually produce, as opposed to a

16 Id.

17 Id.

18 Id. § 39.151(a)(2), (4).

19 Id. § 39.151(d).

20 16 TEX. ADMIN. CODE § 25.501(a).

21 Id.

5
“capacity market” in which generators are paid to maintain capacity for
times of high demand. In an energy-only market, generators are
incentivized to come online in times of high demand by higher prices for
wholesale electricity. To ensure sufficient power generation during
times of high demand, the Commission by rule established a
scarcity-pricing mechanism—or SPM—and directed ERCOT to
administer it. 22
The SPM is a mathematical formula run on ERCOT’s computers
that sends price-based signals to energy generators regarding whether
additional power is needed. Its goal is to ensure that in times of energy
shortage, prices adequately account for high demand and the amount of
reserves needed to keep the lights on. The formula should result in an
inverse correlation between energy capacity in the grid and the price of
electricity—the less energy available, the higher the price to incentivize
generators to add power.
The SPM is complex, but only a few of its components need
explanation here. The Commission by rule sets a ceiling on the price of
energy, called the high system-wide offer cap, or HCAP. In
February 2021, the HCAP was $9,000/MWh. 23 Another component of
the SPM is the value of lost load or VOLL, which reflects the
hypothetical price a customer would pay to avoid the loss of electrical
service. The SPM was designed so that in times of extreme scarcity,
when forced blackouts are imminent or occurring due to an insufficient

22 Id. § 25.509(b).

23 Id. § 25.505(g)(6)(B) (version in effect between May 30, 2019, and July

13, 2021). Today the HCAP is $5,000/MWh. Id. § 25.509(b)(6)(B).

6
supply of electricity to meet demand, the wholesale price of electricity
approaches the VOLL. By Commission rule, the VOLL in February 2021
was set to be equal to the HCAP of $9,000/MWh. 24
C
For the ERCOT grid to remain functional, electricity supply and
demand must remain balanced at a frequency of 60 hertz. The grid can
operate at a frequency of 59.4 hertz for up to nine minutes before grid
failure occurs.
Winter Storm Uri descended upon Texas over Valentine’s Day
weekend of 2021, bringing frigid air from the North Pole and record
snowfall and low temperatures. As energy demand soared, almost 50%
of the power-generation equipment in Texas froze and went offline. In
the early morning hours of Monday, February 15, energy reserves
dipped low enough to trigger the first level of grid emergency,
Emergency Energy Alert Level 1. Within about an hour, reserves had
dipped lower, triggering EEA2 and then EEA3—the highest level of
alert. After breaching EEA3, ERCOT’s protocols required it to “shed firm
load”—start mandatory rolling blackouts—which it did. Available power
continued to fall, which necessitated massive, more widespread
blackouts. That morning, the grid operated at or below 59.4 hertz for
just over four minutes. Texas was fewer than five minutes away from a
total grid collapse that would have plunged the state into darkness for
weeks, maybe months.
The mandatory blackouts averted the worst-case scenario, but

24 Id. § 25.505(g)(6)(C), (E) (version in effect between May 30, 2019, and

July 13, 2021).

7
ERCOT remained in EEA3. ERCOT called the Commission’s attention
to a problem that ERCOT perceived in the pricing signals that the SPM
was sending to the market. Because the system was in load shed—
mandatory blackouts were occurring—the price of energy should have
been at the VOLL and HCAP of $9,000/MWh to incentivize generation.
Instead, the price was fluctuating to as low as $1,200. ERCOT was
having to hold some energy in reserve to maintain the system, and it
believed the SPM interpreted the existence of those reserves to mean
that load shed was no longer occurring.
D
The Commission called an emergency meeting for the evening of
February 15. The notice advised that the meeting was “necessary to
allow the Commission to address the imminent threat to public health
and safety due to this loss of electricity for millions of citizens in the
ERCOT region.” At the meeting, the Commission would determine
whether to “exercise its authority under section 39.151 of [PURA] to
ensure that the electricity market provides clear signals to generators
of the value of generation when customer loads must be shed to protect
the ERCOT system”. Specifically, the Commission would “consider
whether the system demand component of energy prices should be set
at the system-wide offer cap when firm load is being shed.” “Without
such decisions,” the notice stated, “the continuing lack of electricity for
some of the citizens of Texas could result in loss of life or damage to
property that otherwise could be prevented.”
After a short meeting, the Commission issued the first of two
orders at issue in this case. Citing the language in Section 39.151(d) that

8
gives the Commission complete authority over ERCOT, the order
“directs ERCOT to ensure that firm load that is being shed in EEA3 is
accounted for in ERCOT’s scarcity pricing signals”:
ORDER DIRECTING ERCOT TO TAKE ACTION
AND GRANTING EXCEPTION TO COMMISSION
RULES
On February 12, 2021, pursuant to Texas
Government Code § 418.014, in response to an extreme
winter weather event, Governor Greg Abbott issued a
Declaration of a State of Disaster for all counties in Texas.
Further, on February 15, 2021, the Electric
Reliability Council of Texas, Inc. (ERCOT) declared its
highest state of emergency, an Emergency Energy Alert
Level 3 (EEA3), due to exceptionally high electric demand
exceeding supply. ERCOT has directed transmission
operators in the ERCOT region to curtail more than 10,000
megawatts (MW) of firm load. The ERCOT System is
expected to remain in EEA3, and firm load shed is expected
to continue, for a sustained period of time in light of the
expected duration of the extreme weather event.
This Order addresses two significant market
anomalies identified during this EEA3 event.
I. Energy Prices Lower than System-Wide Offer
Cap During Load-Shed Event
ERCOT has informed the Commission that energy
prices across the system are clearing at less than $9,000,
which is the current system-wide offer cap pursuant to 16
TAC § 25.505(g)(6)(B). At various times today, energy
prices across the system have been as low as approximately
$1,200. The Commission believes this outcome is
inconsistent with the fundamental design of the ERCOT
market. Energy prices should reflect scarcity of the supply.
If customer load is being shed, scarcity is at its maximum,
and the market price for the energy needed to serve that

9
load should also be at its highest.
Utilities Code § 39.151(d) gives the Commission
“complete authority” over ERCOT, the independent
organization certified by the Commission pursuant to
§ 39.151. Further, 16 TAC § 25.501(a) provides that
ERCOT determines market clearing prices of energy and
other ancillary services in the ERCOT market unless
“otherwise directed by the commission.”
Pursuant to this authority, the Commission
determines that adjustments are needed to ERCOT prices
to ensure they accurately reflect the scarcity conditions in
the market. Accordingly, the Commission directs ERCOT
to ensure that firm load that is being shed in EEA3 is
accounted for in ERCOT’s scarcity pricing signals. The
Commission further directs ERCOT to correct any past
prices such that firm load that is being shed in EEA3 is
accounted for in ERCOT’s scarcity pricing signals. 25
The following day, February 16, the Commission issued a second order
that is identical to the first except that it rescinds the last sentence
under part I of the February 15 order directing ERCOT to correct past
prices.
ERCOT acted on the Commission’s directive by manually
plugging a value into the SPM that would have the effect of raising the

25Commission rules also set a floor price for energy, called the low
system-wide offer cap or LCAP. In February 2021, the LCAP was the greater
of $2,000/MWh or 50 times the natural gas price index value determined by
ERCOT. Id. § 25.505(g)(6)(A) (version in effect between May 30, 2019, and July
13, 2021). In part II of the order, the Commission suspended the LCAP due to
abnormal fuel prices. “Due to exceptionally high natural gas prices at this time,
if the LCAP is calculated as ‘50 times the natural gas price index value,’ it may
exceed the high system-wide offer cap (HCAP) of $9,000 per MWh”, the order
explains.
Respondents do not challenge the part of the orders suspending the
LCAP.

10
price of electricity to $9,000. This manual change remained in place
until the grid returned to normal operations on February 19.
E
The storm’s fallout was substantial. All three commissioners
resigned. The Legislature sprang into action, enacting laws to improve
preparation for winter weather emergencies 26 and to stabilize the
market by offering a securitization program to market participants who
had suffered defaults or losses from the high prices. 27 Still, some utilities
went bankrupt.
Luminant is a power company that both buys and sells electricity.
Although its sales offset some of the losses from purchasing electricity
during the storm, Luminant claims that it suffered a net loss of a billion
dollars from purchasing electricity at $9,000 during the storm.
Luminant filed administrative challenges to the invoices it received for
those purchases 28 and, in March 2021, sought judicial review of the
Orders in the court of appeals under PURA Section 39.001(e)-(f). Several
parties intervened on each side.
A two-judge panel rejected each of the jurisdictional objections
raised by the Commission and held that the Orders exceed the
Commission’s authority under PURA and are therefore invalid. 29 The

26 Act of May 30, 2021, 87th Leg., R.S., ch. 426, 2021 Tex. Gen. Laws

833 (S.B. 3).
27 Act of May 30, 2021, 87th Leg., R.S., ch. 908, 2021 Tex. Gen. Laws

2218 (H.B. 4492).
28 The administrative proceedings are abated until this litigation
concludes.
29 665 S.W.3d at 192.

11
court did not reach Luminant’s alternative argument that the Orders
fail to comply with the procedural rulemaking requirements of the APA.
The Commission and parties aligned with it filed petitions for review,
which we granted. 30
II
We start, as we must, with jurisdiction. The Commission
challenges the court of appeals’ subject-matter jurisdiction on three
bases.
A
The Commission raises issues of standing and mootness.
“Constitutional standing requires a concrete injury that is both
traceable to the defendant’s conduct and redressable by court order.” 31
The Commission acknowledges that being overcharged for electricity is
the “sort of pocketbook injury [that] is a prototypical form of injury in
fact”, 32 but it argues that Luminant’s injuries are not redressable
through this appeal. Specifically, the Commission argues that what
Luminant “ultimately seek[s]” is “retrospective repricing”—it wants its
money back—and PURA does not authorize the court of appeals to grant
that relief. The court can only “render judgment affirming the rule or

Our references to the arguments of the Commission include the
30

arguments of all petitioners, and our references to the arguments of Luminant
include the arguments of all respondents.
31 Tex. Bd. of Chiropractic Exam’rs v. Tex. Med. Ass’n, 616 S.W.3d 558,

567 (Tex. 2021) (citing Heckman v. Williamson County, 369 S.W.3d 137, 154-
155 (Tex. 2012)).
32 Mosaic Baybrook One, L.P. v. Simien, 674 S.W.3d 234, 251 (Tex. 2023)

(quoting Collins v. Yellen, 141 S. Ct. 1761, 1779 (2021)).

12
reversing and, if appropriate on reversal, remand[] the rule to the
commission for further proceedings, consistent with the court’s opinion
and judgment.” 33
But Luminant has challenged the invoices it received during the
storm in an administrative proceeding, which is abated pending the
outcome of this litigation. If the court of appeals’ judgment invalidating
the Orders were upheld, the decision would be binding in the
administrative process. The Commission points out that “it must be
‘likely,’ as opposed to merely ‘speculative,’ that the injury will be
‘redressed by a favorable decision.’” 34 The Commission argues that
whether Luminant could recoup its losses in the administrative
proceeding is speculative because ERCOT does not maintain a fund of
money—it just facilitates market transactions—and any payment would
come out of the pocket of other market participants. Essentially, the
Commission’s argument is that the egg cannot be unscrambled. Yet
potentially it can. Luminant points us to ERCOT protocols authorizing
invoice repricing and market-wide resettlements 35 and to a market-wide
resettlement that occurred just prior to the storm. 36 We conclude that

33 TEX. UTIL. CODE § 39.001(f).

34 Heckman, 369 S.W.3d at 154-155 (quoting Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-561 (1992)).
35 See ERCOT NODAL PROTOCOLS §§ 6.3(4), 20.10.

36 See Pub. Util. Comm’n of Tex., Complaints and Appeals of DC Energy

Tex., LLC and Monterey TX, LLC Against ERCOT, Docket No. 50871 (Feb. 12,
2021) (final order at 11), https://interchange.puc.texas.gov/Documents/50871_
32_1110661.pdf.

13
Luminant has standing to seek judicial review of the Orders. 37
We are likewise unpersuaded by the Commission’s argument that
Luminant’s appeal was moot 38 before it even began. The Commission
argues that the Orders expired on their own terms when the market
returned to normal operations on February 19, 2021. But Luminant
suffered financial loss as a result of the Orders. Following the
Commission’s logic would mean that short-term rules could never be
challenged. That is not the law. 39

37 See San Jacinto River Auth. v. Medina, 627 S.W.3d 618, 625 (Tex.

2021) (concluding that homeowners whose properties flooded during Hurricane
Harvey had standing to sue the River Authority for statutory takings under
Chapter 2007 of the Government Code, even though Chapter 2007 does not
authorize damages, because the statute provides other remedies, including
“invalidation of the governmental action resulting in the taking”).
38 About mootness, we recently wrote:

The mootness doctrine—a constitutional limitation founded in
the separation of powers between the governmental branches—
prohibits courts from issuing advisory opinions. A case becomes
moot when (1) a justiciable controversy no longer exists between
the parties, (2) the parties no longer have a legally cognizable
interest in the case’s outcome, (3) the court can no longer grant
the requested relief or otherwise affect the parties’ rights or
interests, or (4) any decision would constitute an impermissible
advisory opinion.
Elec. Reliability Council of Tex., Inc. v. Panda Power Generation Infrastructure
Fund, LLC, 619 S.W.3d 628, 634-635 (Tex. 2021) (citation omitted).
39 See City of Corpus Christi v. Pub. Util. Comm’n of Tex., 572 S.W.2d

290, 300 (Tex. 1978) (holding that the cities’ challenge to an interim order of
the Commission granting a rate increase was not moot, even though it had
been superseded by a final order, because “if the interim order should be
determined to be invalid, . . . this court could grant relief by allowing the cities
to recover the temporary rates paid under the interim order”).

14
B
PURA authorizes judicial review of competition rules. 40 The
Commission argues that the Orders are not rules at all, much less
competition rules. The APA defines rule as “a state agency statement of
general applicability” that “implements, interprets, or prescribes law or
policy” or “describes the procedure or practice requirements of a state
agency”. 41 The definition “includes the amendment or repeal of a prior
rule” but “does not include a statement regarding only the internal
management or organization of a state agency and not affecting private
rights or procedures.” 42 The Commission argues that the Orders do not
meet this definition because “they applied only to a single, discrete
event: the EEA3 event that occurred [during Winter Storm Uri].”
We conclude that the Orders meet the APA’s definition of a rule.
They directed ERCOT to implement the Commission’s policy that “[i]f
customer load is being shed, scarcity is at its maximum, and the market
price for the energy needed to serve that load should also be at its
highest.” This policy applied to all market transactions. 43 And while the

40 See TEX. UTIL. CODE § 39.001(e) (“Judicial review of competition rules

adopted by the commission shall be conducted under Chapter 2001,
Government Code, except as otherwise provided by this chapter.”); id.
§ 39.001(f) (“A person who challenges the validity of a competition rule must
file a notice of appeal with the court of appeals . . . .”).
41 TEX. GOV’T CODE § 2001.003(6)(A).

42 Id. § 2001.003(6)(B)-(C).

43 Cf. El Paso Hosp. Dist. v. Tex. Health & Hum. Servs. Comm’n, 247

S.W.3d 709, 714 (Tex. 2008) (holding that HHSC’s imposition of a cutoff date
for selecting claims data from which to calculate Medicaid reimbursement
rates was a statement of general applicability because it “affect[ed] all

15
Orders were addressed to ERCOT, the policy they implemented affected
market participants directly. 44
We also conclude that the Orders are competition rules within the
meaning of PURA. The statute does not define competition rule. Citing
dictionary definitions of competition and derivative terms, the
Commission proffers that “competition rules are anti-monopolistic rules
geared toward curbing the effects of monopolies and other
anti-competitive practices.” There is no language in PURA to support
such a narrow construction. We need not delineate the precise contours
of competition rule. The Orders were adopted under Chapter 39. A fair
reading of Section 39.001 indicates that a rule regulating pricing of the
wholesale electricity market is within the term’s ambit. 45
The Commission points out that in 2023, the Legislature

hospitals receiving reimbursement for inpatient Medicaid services”); id.
(“Thus, no question exists that the February 28 cutoff is a statement of general
applicability because it applies to all hospitals.”); see also R.R. Comm’n of Tex.
v. WBD Oil & Gas Co., 104 S.W.3d 69, 79 (Tex. 2003) (“By ‘general
applicability’, the APA definition references statements that affect the interest
of the public at large such that they cannot be given the effect of law without
public input.”).
44 Cf. El Paso Hosp. Dist., 247 S.W.3d at 714-715 (explaining that “the

February 28 cutoff [was] not a statement regarding the agency’s internal
management or organization but rather affect[ed] the Hospitals’ private
rights” by “directly affecting [their] right to reimbursement”).
The parties dispute whether part I of the Orders, being challenged here,
amended the pricing rules then in effect. See TEX. GOV’T CODE
§ 2001.003(6)(B). We need not resolve that dispute. However, we note that
part II of the Orders, which has not been challenged, expressly “grant[s] an
exception to” the pricing rules by suspending the LCAP then in effect. See
supra note 25.
45 See TEX. UTIL. CODE § 39.001(a) (mentioning “electric services and

16
amended Chapter 39 to distinguish between rulemaking and a written
order of the Commission adopted by majority vote and to authorize the
Commission to give ERCOT verbal directives in an emergency. 46 The
Commission argues that these amendments codify its preexisting
authority to direct ERCOT through a written order that is distinct from
rulemaking. Yet there is nothing in the text reflecting the Legislature’s
intent either to confirm existing authority of the Commission or to give
the Commission new authority, and the amendments did not take effect
until September 1, 2023. Our task, therefore, is to determine whether
the Orders are competition rules under the 2021 version of PURA such

their prices”); id. § 39.001(c) (prohibiting rules that regulate “prices” “except as
authorized in this title”).
Indeed, the Commission has previously labeled a rule it described as
“governing the enforcement of wholesale electricity markets and ERCOT
administered markets” as a competition rule. Pub. Util. Comm’n of Tex., Re
Enforcement of Wholesale Market Rules, Project No. 26201, 230 P.U.R.4th
361, 2004 WL 367935, at *2 (Feb. 9, 2004) (order adopting 16 TEX. ADMIN.
CODE § 25.503). In addition, the Orders cite Section 39.151(d) specifically, and
the Commission has designated rules adopted under Section 39.151 as
competition rules. See, e.g., Pub. Util. Comm’n of Tex., Order Adopting
Amendment to §25.363 as Approved at the June 20, 2014 Open Meeting,
Project No. 41949 (July 1, 2014) (at 1), https://interchange.puc.texas.gov/Docu
ments/41949_12_798868.pdf.
46 See Act of May 28, 2023, 88th Leg., R.S., ch. 410, § 17, 2023 Tex. Gen.

Laws __ (H.B. 1500) (codified at TEX. UTIL. CODE § 39.1514); see TEX. UTIL.
CODE § 39.1514(a) (stating a general rule that “[t]he commission may direct
[ERCOT] to take an official action only through: (1) a contested case;
(2) rulemaking; or (3) a memorandum or written order adopted by a majority
vote”); id. § 39.1514(c) (authorizing the Commission to “use a verbal directive
to direct [ERCOT] to take an official action in an urgent or emergency
situation”, while requiring the Commission to “establish criteria for
determining whether a situation is urgent or an emergency” and to “establish
a process” for issuing emergency directives).

17
that they could be challenged by direct appeal to the court of appeals.
We hold that they are.
Having concluded that the court of appeals had jurisdiction over
Luminant’s suit, we turn to the merits.
III
The Commission argues that the court of appeals erred in its
conclusion that the Orders exceed the Commission’s authority under
PURA. We agree.
A
Agency rules are presumed valid, and the challenger has the
burden of proving a rule’s invalidity. 47 A challenger can meet this
burden by showing that the challenged rule (1) contravenes specific
statutory language; (2) runs counter to the general objectives of the
statute; or (3) imposes additional burdens, conditions, or restrictions in
excess of or inconsistent with the relevant statutory provisions. 48 Only
(1) and (2) are at issue here.
We discern a statute’s objectives from its plain text. 49 That text
must always be read “in context—not isolation.” 50 We “give meaning to
every word in a statute, harmonizing each provision”, 51 while

47 Tex. Bd. of Chiropractic Exam’rs, 616 S.W.3d at 569 (citing Tex. State

Bd. of Exam’rs of Marriage & Fam. Therapists v. Tex. Med. Ass’n, 511 S.W.3d
28, 33 (Tex. 2017)).
48 Id. (citing Marriage & Fam. Therapists, 511 S.W.3d at 33).

49 Id. (citing Marriage & Fam. Therapists, 511 S.W.3d at 33).

50 State v. Hollins, 620 S.W.3d 400, 407 (Tex. 2020).

51 Hogan v. Zoanni, 627 S.W.3d 163, 175 (Tex. 2021).

18
“consider[ing] the context and framework of the entire statute”, in order
to “meld its words into a cohesive reflection of legislative intent.” 52 At
the same time, “[w]e take statutes as we find them, presuming the
Legislature included words that it intended to include and omitted
words it intended to omit.” 53
B
The court of appeals’ opinion acknowledges some of these
principles, yet its analysis departs from them. The court compared the
legislative findings on the desirability of competition in
Section 39.001(a) and (d) 54 with the language setting out ERCOT’s
responsibility to ensure the reliability of the power grid and the
Commission’s responsibility to make rules on that topic in
Section 39.151(a) and (d). 55 The court then phrased “[a] threshold
question” as “whether the authority granted by Section 39.151 qualifies,

52 Cadena Comercial USA Corp. v. Tex. Alcoholic Beverage Comm’n, 518

S.W.3d 318, 326 (Tex. 2017).
53 Union Carbide Corp. v. Synatzske, 438 S.W.3d 39, 52 (Tex. 2014).

54 See TEX. UTIL. CODE § 39.001(a) (stating that “the public interest in

competitive electric markets requires that, [with some listed exceptions],
electric services and their prices should be determined by customer choices and
the normal forces of competition”); id. § 39.001(d) (“Regulatory authorities . . .
shall authorize or order competitive rather than regulatory methods to achieve
the goals of this chapter to the greatest extent feasible and shall adopt rules
and issue orders that are both practical and limited so as to impose the least
impact on competition.”).
55 See id. § 39.151(a)(2) (listing “ensure the reliability and adequacy of

the regional electrical network” among ERCOT’s functions); id. § 39.151(d)
(“The commission shall adopt and enforce rules relating to the reliability of the
regional electrical network . . . or may delegate [that] responsibilit[y] to an
independent organization.”).

19
or is qualified by, the limitations imposed by 39.001.” 56 “Put another
way,” the court said, “the question is whether, or to what extent,
Section 39.151’s directive to ensure system reliability provides an
exception to Section 39.001’s general preference for reliance on
competition rather than regulation to set prices.” 57
The court observed that “Section 39.151 is silent as to whether
‘regulatory’ rather than ‘competitive’ methods may be adopted to ensure
grid reliability.” 58 From there, it concluded that “the Commission’s
actions must be subject to the constraint provided by the text of
Section 39.001.” 59 The court believed this result to be directed by “the
whole-text canon”, which, the court said, “require[d] that [it] give effect
to the phrase ‘greatest extent feasible’” in Section 39.001(d). 60 To find
that the Orders complied with the statement in Section 39.001(d) that
the Commission “shall authorize or order competitive rather than
regulatory methods to achieve the goals of [Chapter 39] to the greatest
extent feasible”, the court said that it “must find that the Orders could
not have used ‘competitive rather than regulatory methods’ to any
greater extent than they did as issued.” 61 “This [it] [could not] do”
because, prior to the Orders’ being issued, the “SPM did not result in

56 665 S.W.3d at 191.

57 Id.

58 Id.

59 Id.

60 Id.

61 Id.

20
‘HCAP’ pricing.” 62
C
The whole-text canon “calls on the judicial interpreter to consider
the entire text, in view of its structure and of the physical and logical
relation of its many parts.” 63 It incorporates the principles of statutory
interpretation we have set out above. 64 The canon does not support the
court of appeals’ analysis or conclusion. Applying it yields the opposite
result. Instead of treating Sections 39.001 and 39.151 as conflicting, 65
the court should have asked whether they can be harmonized 66 within

62 Id.

63ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE
INTERPRETATION OF LEGAL TEXTS 167 (2012) [hereinafter READING LAW].
64 The authors explain:

Many of the other principles of interpretation are derived from
the whole-text canon—for example, the rules that an
interpretation that furthers the document’s purpose should be
favored (§ 4 [presumption against ineffectiveness]), that if
possible no word should be rendered superfluous (§ 26
[surplusage canon]), that a word or phrase is presumed to bear
the same meaning throughout the document (§ 25 [presumption
of consistent usage]), that provisions should be interpreted in a
way that renders them compatible rather than contradictory
(§ 27 [harmonious-reading canon]), that irreconcilably
contradictory provisions should be given no effect (§ 29
[irreconcilability canon]), and that associated words bear on one
another’s meaning (noscitur a sociis) (§ 31 [associated-words
canon]).
Id. at 168.
65 See 665 S.W.3d at 191.

66 Hogan, 627 S.W.3d at 175; see READING LAW, supra note 63, at 180

(“[T]here can be no justification for needlessly rendering provisions in conflict
if they can be interpreted harmoniously.”).

21
the context and framework of the entire statute, 67 giving effect to both. 68
The answer is yes.
Section 39.001 announces the legislative policy that the price of
electricity should be determined by competition while also
acknowledging that the new market will not be completely unregulated.
Subsection (a) states that prices should be determined by competition
“except for transmission and distribution services and for the recovery
of stranded costs”. 69 Subsection (c) reflects the Legislature’s
understanding that “[r]egulatory authorities” may indeed have to “make
rules or issue orders regulating . . . prices . . . or restricting . . .
competition” by stating that such rules can only be made “as authorized
in this title”. 70 Subsection (d) provides that “[r]egulatory authorities . . .
shall authorize or order competitive rather than regulatory methods to
achieve the goals of this chapter”, but then the Legislature added, “to
the greatest extent feasible”. 71 Subsection (d) also directs regulatory
authorities to “adopt rules and issue orders that are both practical and
limited so as to impose the least impact on competition.” 72 Luminant
argues that Section 39.001 prohibits the Commission from engaging in

67 Cadena Comercial, 518 S.W.3d at 326; see READING LAW, supra note

63, at 167 (“The text must be construed as a whole.”).
68 Hogan, 627 S.W.3d at 175; see READING LAW, supra note 63, at 174

(“If possible, every word and every provision is to be given effect . . . .”).
69 TEX. UTIL. CODE § 39.001(a).

70 Id. § 39.001(c).

71 Id. § 39.001(d).

72 Id. (emphasis added).

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any act whatsoever that regulates prices, but it gets there by
disregarding much of the section’s language. 73
The subchapters that follow flesh out how the transition to a
competitive market will take place and how the new market will be
structured. They reveal an additional legislative policy: the provision of
reliable electric service. Within a subchapter addressing retail
competition, Section 39.101 directs the Commission, prior to the
transition’s being completed, to establish protections entitling a
customer “to safe, reliable, and reasonably priced electricity, including
protection against service disconnections in an extreme weather
emergency”. 74 Later, Section 39.151 expressly directs ERCOT to “ensure
the reliability and adequacy of the regional electrical network” 75 and
gives the Commission “complete authority” to ensure that ERCOT
adequately performs that duty, which includes rulemaking “relating to
the reliability of the regional electrical network”. 76 In sum, the Orders
are authorized by Section 39.151. Nothing in Section 39.001 changes

73 Luminant urges that “to the greatest extent feasible” in
Section 39.001(d) modifies the phrase immediately preceding it, “to achieve the
goals of this chapter”, rather than the earlier language directing the
Commission to “authorize or order competitive rather than regulatory
methods”. But this reading does not change the sentence’s overall meaning
because the sentence must be read in context. And as we explain, the
Legislature acknowledges in other statutory language, including the very next
sentence, that competitive methods may not always suffice to achieve all the
chapter’s goals.
74 Id. § 39.101(a)(1).

75 Id. § 39.151(a)(2).

76 Id. § 39.151(d).

23
that; 77 to the contrary, Section 39.001 acknowledges that the goal of
prices set by competition may, in some circumstances, have to yield.
Deciding when those circumstances are present—and how to
respond—is the Commission’s job, not the judiciary’s. We addressed the
judiciary’s limited role in reviewing agency rules for validity in Texas
Board of Chiropractic Examiners v. Texas Medical Ass’n. 78 That case
involved rules by the Chiropractic Examiners Board defining two terms
that the Legislature had used in defining the scope of chiropractic
practice. 79 The Medical Association challenged the rules’ validity under
the APA, arguing that the rules enlarged the scope of chiropractic
beyond its statutory bounds.
We criticized the trial court for “weigh[ing] evidence—specifically,
witness testimony presenting each side’s view of the appropriate line
between chiropractic and [medicine]—as if it were doing the Board’s
work anew.” 80 We reiterated that “[t]he proper question for the court
was whether, despite [the rules’] presumption of validity, [they]
contravene[] the Act’s specific text or run[] counter to its purpose as a
matter of law.” 81 This textual analysis “ensures that courts will stay in

77 “[A] preamble or purpose clause . . . cannot expand [text] beyond its

permissible meaning. If they could, they would be the purposivists’
playground . . . .”). READING LAW, supra note 63, at 35.
78 616 S.W.3d 558.

79 Id. at 560.

80 Id. at 571.

81 Id.

24
their lane.” 82 “Judges are experts in statutory analysis, not in
healthcare”, we said. 83 “To prevent expensive and time-consuming
usurpations of administrative agencies’ policymaking work, the court’s
inquiry in a . . . suit challenging the validity of an agency rule must be
limited.” 84
The lessons of Chiropractic Examiners apply squarely here. The
Commission has the expertise to manage the electric utility industry;
the courts do not. The court of appeals thus strayed from its lane by
inquiring whether the Orders could have used “‘competitive rather than
regulatory methods’ to any greater extent than they did”. 85 And for the
same reason, we must decline Luminant’s invitation to second-guess the
Orders’ necessity and whether it was the price hike they enacted or the
Commission’s earlier load-shed directives that truly saved the grid from
collapse.
When the claim is that an agency rule exceeds the scope of
statutory law, the judiciary’s role is purely textual. We have concluded
that the Orders do not “contravene[] specific statutory language” or
“run[] counter to the general objectives of” Chapter 39, so the
presumption of validity holds. 86
IV
Because of the court of appeals’ holding on PURA, the court did

82 Id.

83 Id.

84 Id.

85 665 S.W.3d at 191 (quoting TEX. UTIL. CODE § 39.001(d)).

86 Tex. Bd. of Chiropractic Exam’rs, 616 S.W.3d at 569.

25
not reach Luminant’s alternative argument that the Orders violate the
APA’s rulemaking procedures. The issue is fully briefed in this Court,
and the parties urge us to address it. We do and conclude that the Orders
substantially comply with the statutory requirements.
The Government Code authorizes a state agency to “adopt an
emergency rule without prior notice or hearing, or with an abbreviated
notice and a hearing that it finds practicable, if the agency”:
(1) finds that an imminent peril to the public health, safety,
or welfare . . . requires adoption of a rule on fewer than
30 days’ notice; and
(2) states in writing the reasons for [that] finding . . . . 87
The finding of imminent peril “shall [be] set forth in an emergency rule’s
preamble”. 88 The agency “shall file” the emergency rule and the written
reasons for it “in the office of the secretary of state for publication in the
Texas Register”. 89 The Legislature has determined that substantial
compliance with these requirements is enough to defeat a procedural
challenge to an emergency rule. 90 “A mere technical defect that does not
result in prejudice to a person’s rights or privileges is not grounds for
invalidation of a rule.” 91

87 TEX. GOV’T CODE § 2001.034(a). An emergency rule “may be effective

for not longer than 120 days and may be renewed once for not longer than 60
days.” Id. § 2001.034(c).
88 Id. § 2001.034(b).

89 Id. § 2001.034(d).

90 See id. § 2001.035(a) (“A rule is voidable unless a state agency adopts

it in substantial compliance with Sections 2001.0225 through 2001.034.”).
91 Id. § 2001.035(d).

26
A
The requirement of a written finding of imminent peril and
reasons for that finding in the rule’s preamble is satisfied by language
in the Orders’ introductory paragraphs, which note:
• the Governor’s having issued a statewide disaster declaration
under Section 418.014 of the Government Code; 92
• ERCOT’s having “declared its highest state of emergency”, an
EEA3, “due to exceptionally high electric demand exceeding
supply”;
• ERCOT’s having directed transmission operators to shed load;
and
• the expectations that ERCOT would remain in EEA3 and load
shed would continue “for a sustained period of time in light of the
expected duration of the extreme weather event.”
Luminant complains that the Commission did not quote the exact
statutory language under a heading titled “preamble”. But only
substantial compliance is required. We have said that “[a]n agency’s
order substantially complies with” a procedural rulemaking
requirement if it “accomplishes the legislative objectives underlying the
requirement” and “comes fairly within [its] character and scope”. 93 The
requirement that a reasoned finding of imminent peril be set out at the
beginning ensures that the agency explains to the public why it is not
following the usual procedures and timeline before making the rule. The
language the Commission included in the Orders’ introduction achieves

92 To do so, the Governor must “find[] a disaster has occurred or that

the occurrence or threat of disaster is imminent.” Id. § 418.014(a).
93 Nat’l Ass’n of Indep. Insurers v. Tex. Dep’t of Ins., 925 S.W.2d 667, 669

(Tex. 1996).

27
that goal. 94
B
It is undisputed that the Commission did not file the Orders with
the Secretary of State to be published in the Texas Register. Publication
in the Register is the only formal statutory notice requirement for an
emergency rule, 95 but under the Secretary’s regulations, there is an
almost two-week gap between the deadline for filing a rule and the date
of its publication in the Register. 96 If the Commission had filed the
Orders with the Secretary but done nothing else, the Orders would have
expired before any interested party received notice of them.
Elsewhere, the APA states that an “agency shall take appropriate
measures to make emergency rules known to persons who may be
affected by them.” 97 The Commission did that by immediately posting
the Orders on its website. The Orders were also summarized and linked

94 Luminant also argues that the Commission was required to comply

with Section 2001.033, which requires that a final state agency order adopting
a rule include “a reasoned justification” for it. See TEX. GOV’T CODE
§ 2001.033(a)(1). This requirement applies to a final rules order promulgated
in the ordinary course, not an emergency rule adopted under Section 2001.034.
The “reasoned justification” required by Section 2001.033 must include “a
summary of comments received from parties interested in the rule” and “the
reasons why the agency disagrees with party submissions and proposals”. Id.
§ 2001.033(a)(1)(A), (C). But emergency rulemaking is authorized when there
is not time for a notice-and-comment period. See id. § 2001.034(a) (authorizing
the adoption of “an emergency rule without prior notice or hearing”).
95 See id. § 2001.034(d).

96 See 1 TEX. ADMIN. CODE § 91.6(a) (“The Texas Register publishes 52

issues yearly, excluding indexes. Friday is the day of publication.”); id. § 91.6(b)
(“Rule filing deadline: 12:00 noon, Monday, the week before publication.”).
97 TEX. GOV’T CODE § 2001.036(b).

28
in a notice that was posted on ERCOT’s website and emailed to its
distribution list. Under the circumstances, these measures provided
better and faster notice to interested parties and the public than
publication in the Register would have.
Luminant argues that substantial compliance does not apply to
the filing requirement because the APA provides that emergency rules
become “effective immediately on filing with the secretary of state”. 98
Yet the statutory text says that it does. “A rule is voidable unless a state
agency adopts it in substantial compliance with Sections 2001.0225
through 2001.034.” 99 The filing requirement for an emergency rule is in
Section 2001.034(d).
Finally, neither Luminant nor any other respondent has
articulated any prejudice resulting from the Commission’s failure to file
the Orders with the Secretary. 100 There is no dispute that respondents
had actual notice of the Orders. Luminant contends that the
Commission’s “hasty process . . . cost Luminant and other market
participants hundreds of millions of dollars”. But that complaint is about
the Orders’ substance, not their procedure.
We hold that the Commission substantially complied with the

98 Id. § 2001.036(a)(2).

99 Id. § 2001.035(a).

100 See id. § 2001.035(d) (“A mere technical defect that does not result

in prejudice to a person’s rights or privileges is not grounds for invalidation of
a rule.”); cf. City of Corpus Christi v. Pub. Util. Comm’n of Tex., 51 S.W.3d 231,
264 (Tex. 2001) (Owen, J., concurring) (“[W]e have previously held that failure
to follow procedural requirements of statutes or rules is not reversible error
without a showing of harm.” (citing Imperial Am. Res. Fund, Inc. v. R.R.
Comm’n of Tex., 557 S.W.2d 280, 288 (Tex. 1977))).

29
APA’s emergency rulemaking procedure.
* * * * *
We reverse the judgment of the court of appeals and render
judgment affirming the Orders. 101

Nathan L. Hecht
Chief Justice

OPINION DELIVERED: June 14, 2024

101 TEX. UTIL. CODE § 39.001(f); TEX. R. APP. P. 60.2(c).

30