The Texas Supreme Court will hear oral argument on September 29 in Centerpoint Energy Resources Corp. v. Ramirez(No. 20-0354), a case that tests the limits of liability of a public utility for personal injuries sustained by a guest in a home served by the utility.
Attempting to repair a dryer in his daughter’s home, Mr. Ramirez was severely injured when he inadvertently opened a gas valve to an unused gas line, causing the gas to ignite and explode. He and his wife sued Centerpoint, the gas utility that supplied gas to the home, the homebuilder, and the plumbing subcontractor who installed the gas lines. The jury determined that the homebuilder bore 60% of the fault, Centerpoint 34%, and the plumber 6%. It awarded nearly $7 million in actual damages against Centerpoint and the homebuilder. The plaintiffs settled with the plumber before trial and the homebuilder while the appeal was pending. Centerpoint appealed.
The San Antonio Court of Appeals affirmed the trial court. In an opinion authored by Chief Justice Sandee Bryan Marion, the court of appeals rejected Centerpoint’s argument that the “filed-rate doctrine” precludes liability. The doctrine provides that “a tariff filed and approved by an administrative agency (here the Railroad Commission) under a statutory scheme is presumed reasonable unless a litigant proves otherwise.” Centerpoint’s tariff limits the utility’s liability for damage or loss caused by gas escaping from housepiping, as well as for damage or personal injury caused by gas or its use after the gas leaves the point of delivery. SCOTX has upheld such liability limitations as reasonable because they are inherently part of a negotiated rate. The court of appeals, however, found that the plaintiffs, who were guests in the home at the time of the accident, were not “consumers, customers, or applicants” of the utility as the tariff defines those terms. The court of appeals further held that there was legally sufficient evidence to support the plaintiffs’ negligent undertaking claim against Centerpoint.
Centerpoint’s petition for review, which SCOTX granted in June, raises to points of error in the court of appeals decision. First, the court of appeals erroneously interpreted the filed-rate doctrine to exclude non-customers from the tariff’s limitation of liability as a matter of law. As Centerpoint points out, “[U]nder that holding, no one other than the person named on the utility bill—not even cohabitants in the same dwelling—are subject to these carefully calibrated and regulatorily approved limitation of liability provisions.” Second, Centerpoint contends that the court of appeals imposed a duty on the utility to inspect the interior of a home before turning on the gas service, despite the longstanding legal and regulatory rule that utilities “have no control over anything on the customer’s side of the meter.” The Office of the Attorney General has intervened in support of Centerpoint’s defense of the filed-rate doctrine and the comprehensive regulatory regime governing gas utilities enacted by the Legislature and executed by the Railroad Commission.
If the court of appeals’ decision stands, it will substantially expand a gas utility’s exposure to liability. That risk is not currently reflected in the rates consumers pay, but it eventually will be. The purpose of the filed-rate doctrine is to limitsuch risk in order to keep rates reasonable and affordable for businesses and homeowners. It is important to note that once a tariff is properly filed and approved, it has the force law. Public utilities are bound by them, just as customers are, and cannot vary rates for individual customers, discriminate in providing services, or charge anything other than the tariff permits. By misinterpreting this law to gut its liability provisions, the court of appeals has nullified the Legislature’s careful balancing of interests between the utility and the people it serves.