CPS Energy, a public utility owned by the City of San Antonio, owns poles on which telephone and cable companies attach equipment, and in 1984 Spectrum's predecessor signed an agreement letting it attach to CPS's poles for $3.75 per pole per year, with an escalator clause, under which the parties promised at all times to "observe and comply with" all laws that affect their rights and obligations, and either party could terminate on six months' notice.¹ In 1987 CPS made a similar agreement with AT&T without an escalator, so Spectrum's rate rose while AT&T kept paying $3.75, and from 2007 CPS invoiced both at what it viewed as the maximum rate but collected the higher rate only from Spectrum.² Spectrum sued in 2008 for breach of contract and violations of the pricing requirements of the Public Utility Regulatory Act (PURA), whose 2005 amendments bar municipally owned utilities from discriminating in pole-attachment rates.³

The trial court abated the suit under the Public Utility Commission's primary jurisdiction, the commission found CPS violated section 54.204 and this Court upheld that finding in Time Warner Cable Texas LLC v. CPS Energy in 2019 without reaching section 54.204(c).¹ On remand Spectrum alleged that the discriminatory rates violated section 54.204(b) and (c) and so breached the parties' agreement, and the trial court granted CPS partial summary judgment on the statutory and unjust-enrichment claims but granted Spectrum summary judgment on breach of contract, then certified a permissive appeal.² The Thirteenth Court of Appeals (Corpus Christi-Edinburg) reversed, holding that the 1984 agreement did not renew each year and so did not incorporate new statutes.³ The Supreme Court heard argument on February 11, 2026 and on April 10, 2026 reversed and remanded.⁴

Petition for review from the Thirteenth Court of Appeals (Corpus Christi-Edinburg) in a permissive appeal; argued February 11, 2026; opinion by Justice Young issued April 10, 2026.⁵

• Spectrum:¹ whether the court of appeals erred in holding that CPS's illegal conduct did not breach its 1984 agreement, effectively immunizing the agreement against statutory changes during the decades it remained in place.
• CPS:² whether the court of appeals correctly determined that the 1984 agreement did not contemplate or incorporate a 2005 amendment to PURA.

The Court did not state a standard of review and construed PURA and the contract's "all laws" clause from their text.¹

Whether the 1984 agreement incorporates later legal changes.

Spectrum (Petitioner): A contract that renews from term to term becomes subject to new laws, the court of appeals' distinction between "continue" and "renew" is meaningless and would set a harmful precedent for evergreen contracts, and a party may sue for breach based on a statutory violation when the statute becomes part of the contract or the contract requires compliance with all laws.¹

CPS Energy (Respondent): Parties are presumed to contract with knowledge of the law but later changes become part of an agreement only if its language clearly shows that intent, and the 1984 agreement was written to continue in effect and not to be remade each year.² The administrative proceeding ended with CPS adjusting historical rates and complying with PURA, and it provides no guidance on the contractual dispute.³

Whether PURA applies.

CPS Energy (Respondent): On remand CPS argued that PURA does not apply to the agreement, and that argument is preserved for review.⁴

Spectrum (Petitioner): The Court held in 2019 that CPS violated the 2005 amendments by charging discriminatory rates, so that conduct breached the agreement.⁵

Spectrum argued that the requirements for creating an evergreen contract are important to the State's jurisprudence because they determine whether a contract renews from term to term and so becomes subject to newly enacted laws.¹

• Threshold concession. Told the clause might cover only community antenna television service, Spectrum's counsel conceded that if that argument were good, the "all laws" provisions would not apply. (Oral Argument, 0:13:15; 0:14:05)
• Cables versus CATV. Asked what in the license authorizes cable attachments rather than community antenna television service, Spectrum's counsel said he thought nothing does, and that both parties' understanding developed over time. (Oral Argument, 0:15:48; 0:19:52)
• No teeth. Asked whether the PUC ordered CPS to comply going forward, Spectrum's counsel said yes but "with no teeth," which is why a contract covering the subject matters. (Oral Argument, 0:18:41)
• Terminate and re-sign. CPS's counsel said the parties could terminate and sign a new contract at any time, with no restriction, if the law changed in a way that mattered. (Oral Argument, 0:36:28)
• Regulated industry. A Justice asked whether a highly regulated industry limits the rule, voicing concern about applying it to ordinary commercial contracts. (Oral Argument, 0:44:52)
• Both can terminate. On rebuttal, Spectrum's counsel said both parties can terminate, so both are subject to changes in the law, and that the changes are commercial decisions. (Oral Argument, 0:48:57)
• Section 54.204. On rebuttal, asked if section 54.204 affects the parties' rights and obligations, Spectrum's counsel said yes, and noncompliance is an actionable breach of contract. (Oral Argument, 0:52:24)

None noted

Holding

PURA applies to the agreement between a municipally owned utility and a regulated telecommunications provider, and the agreement's "all laws" clause incorporates post-1984 legal changes affecting the parties' rights and obligations, so Spectrum may proceed with its breach-of-contract claim based on CPS's alleged violation of sections 54.204(b) and (c).¹

Reasoning

PURA applies because section 54.204(b) bars a municipally owned utility from discriminating in favor of or against a certificated telecommunications provider without caveat, discrimination in favor of AT&T necessarily affects Spectrum's competitive position, section 54.204(c) applies a federal rate ceiling "regardless of the nature of the services," and Spectrum no longer provided only community antenna television service.² Even assuming a single, non-renewing agreement, the "all laws" clause, which commits the parties "at all times" to comply with all laws that affect their rights and obligations "so long as" they remain in effect, reflects that the parties anticipated legal changes in a heavily regulated industry and brought new obligations into the contract in place of constant renegotiation.³ Because Time Warner held that charging both at the same rate but collecting the higher rate only from Spectrum is discrimination under subsection (b), and Spectrum also alleges a violation of subsection (c), it may proceed on its contract claim.⁴

Disposition

Court of appeals' judgment reversed and the case remanded to the trial court for further proceedings.⁵

Vote Breakdown

Majority Opinion by Justice Young

Joined by Blacklock, C.J., and Busby, Devine, Hawkins, Huddle, and Lehrmann, JJ.

Did Not Participate

Bland and Sullivan, JJ.

The Court did not state a standard of review and decided the application of PURA and the meaning of the contract's "all laws" clause from their text.¹

Justice Young delivered the opinion of the Court, and Justices Bland and Sullivan did not participate.¹