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Is there legislation that says otherwise? What should the judges do here?
AFAIK it wouldn't be legislation, it would be damages paid for some kind of breach of contract or some other contract-related issue, since the city delegated energy management to private companies. I'm sure there may be some contractual relationship with the city as well as the customers, but it's not clear to me what type of contractual basis for damages this would amount to.
I suppose it could be gross negligence for not taking reasonable measures to prevent that kind of catastrophic failure, but honestly the standard of care would seem hard to establish. Still, a week without power seems excessive even by extreme weather standards.
Not saying this ruling doesn't suck, just that it seems legally kind of ambiguous.