The Courtroom Risk No One in Power Generation Can Afford to Ignore

In an industry grappling with decarbonization mandates, volatile energy markets, and supply chain uncertainty, another threat has quietly emerged with the power to upend everything: the courtroom. Mega verdicts—jury awards exceeding $10 million—are not new. But the scale, frequency, and unpredictability of these rulings are escalating. According to a 2025 corporate verdicts report published by the independent communications and research firm Marathon Strategies, product liability has become a dominant force in litigation, accounting for $13.7 billion in damages across the U.S. in 2024 alone. While many assume these verdicts target pharmaceutical giants or auto manufacturers, power generation companies are increasingly finding themselves exposed to similar risks. And these aren’t hypothetical scenarios.

When Infrastructure Fails, Liability Explodes

In early 2025, a Texas jury awarded more than $109 million in damages against CPS Energy, a municipally owned utility serving San Antonio. The verdict followed a devastating explosion caused by a leak in natural gas infrastructure installed in the 1960s. The blast left a mother and her son with severe injuries and claimed the lives of two pets. Despite previous reports of gas odors and evidence of corrosion, CPS failed to take sufficient preventative action.

This wasn’t a private multinational or an energy conglomerate—it was a regional provider. Yet, the legal and financial consequences rivaled those of a Fortune 100 litigation. That should be a wake-up call for energy providers of all sizes.

Another recent example: In 2023, a jury in Oregon found PacifiCorp, a utility operating in the Pacific Northwest, liable for its role in the devastating 2020 wildfires. The court awarded $85 million in damages to nine victims after determining that PacifiCorp failed to shut off power lines during extreme fire conditions. Jurors concluded that the company’s actions directly contributed to the ignition and spread of the fires.

These cases demonstrate that energy companies do not need to be involved in explosions or toxic releases to face massive verdicts. A lapse in infrastructure management or delayed action during a weather event can yield similar financial and reputational fallout. Even when utilities follow regulatory guidance, juries may find that more could—and should—have been done to prevent foreseeable harm.

Why Power Generators Are Vulnerable

Power companies operate in an environment defined by physical risk, public scrutiny, and interconnected systems. Equipment failure, whether it’s a cracked valve, a corroded pipeline, or a faulty battery, can trigger not only cascading infrastructure problems but also litigation with potentially devastating consequences.

The sector’s increasing reliance on third-party vendors and emerging technologies only magnifies exposure. Consider:

• Lithium-ion battery installations at solar farms.
• Hydrogen storage and transport systems with evolving safety protocols.
• Aging natural gas infrastructure that remains in active service decades beyond its design life.
• Wind turbine components sourced globally and integrated domestically.

Each of these elements represents a product liability risk. And if failure results in injury, environmental damage, or loss of life, the company operating the facility may face the brunt of public and legal backlash, even when the root cause lies with a supplier.

The Shift in Jury Sentiment

According to Marathon Strategies, the median mega verdict has more than doubled over the last four years, rising to $51 million in 2024. Nearly half of the 135 blockbuster cases reported last year involved either product liability or intellectual property claims. Juries are more willing than ever to penalize perceived negligence with outsized awards. While this shift reflects broader societal skepticism toward corporate accountability, it has practical consequences for power providers.

The legal argument may revolve around a product defect or failure to warn, but the verdict often hinges on emotional narratives. If a plaintiff’s story involves long-term suffering or preventable tragedy, the financial exposure can grow exponentially. This is no longer a risk confined to case-by-case defense. It is a systemic threat that energy leaders must address across the enterprise.

From Risk Awareness to Risk Architecture

Energy executives are accustomed to risk. They model load volatility, cyberattacks, and commodity swings. But litigation—especially product liability tied to infrastructure failure—remains one of the least predictable and most underappreciated forms of risk facing the sector.

One increasingly adopted strategy among sophisticated risk managers is the formation of a captive insurance company, a licensed insurance entity owned by the business itself. Rather than relying solely on commercial policies with exclusions, sublimits, and rising premiums, captives allow companies to take control of their risk profile and build a tailored, flexible insurance architecture.

Captive insurance can serve as a financial buffer and strategic asset in the face of escalating product liability threats. A power company might use its captive to:

• Cover liability claims that fall below traditional deductibles or self-insured retention layers.
• Fund legal defense costs for complex litigation that spans years.
• Provide broader protection for third-party equipment or component failure excluded by standard commercial policies.
• Establish reserves for emerging risks such as environmental liabilities, per- and polyfluoroalkyl substances (PFAS) exposure, or legacy infrastructure failure.

In addition to risk financing, captives enable energy companies to reinvest underwriting profits into safety programs, quality assurance initiatives, or proactive maintenance strategies that reduce the likelihood of future claims. The result is not just protection; it is prevention. By integrating captives into their overall risk posture, power providers can enhance resilience and reduce dependence on commercial insurers, who may exclude the very risks that pose the greatest threats.

A Proactive Legal Risk Strategy Is No Longer Optional

The CPS Energy and PacifiCorp cases are not outliers; they are reflections of what can happen when infrastructure vulnerabilities intersect with legal exposure. But they are also lessons in what can be anticipated and mitigated.

Risk leaders in energy must think beyond the compliance checklist. That means:

• Conducting detailed infrastructure audits focused on legal exposure.
• Mapping liability through the full vendor and equipment lifecycle.
• Engaging legal, operational, and insurance teams in unified scenario planning.
• Revisiting insurance strategy to ensure it aligns with the reality of modern litigation threats.

These steps are not merely best practices—they are survival strategies.

The Stakes Are Existential

The transformation of the energy sector through grid modernization, large-scale renewables, and advanced storage technologies brings complexity, opportunity, and exposure. At the same time, the courtroom has become a critical arena where infrastructure decisions, vendor oversight, and risk management practices are scrutinized under an unforgiving spotlight.

Managing product liability and litigation risk must become a board-level priority. Captive insurance is one of several strategic tools that forward-looking energy companies are using to prepare not just for what could happen, but for what is already happening. Because when the power goes out, the headlines follow—and so do the lawsuits. And in today’s legal climate, the greatest risk may be assuming it won’t happen to you.

—Randy Sadler is a principal with CIC Services LLC. In this role, he consults directly with business owners, CEOs, and CFOs on the formation of captive insurance programs for their businesses. CIC Services manages more than 100 captives.