Update on City of Denton Lawsuit Against ERCOT

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Photo by Tingey Injury Law Firm on Unsplash

Temporary Restraining Order Continued Until April 30, 2021

DENTON, TX, Mar. 9, 2021 –A hearing was held regarding the City of Denton’s lawsuit against the Electric Reliability Council of Texas (ERCOT) at 9 a.m. in the 16th District Court of Denton County. The parties agreed that the temporary restraining order currently in effect will be continued until April 30, 2021. A motion to transfer venue has been filed by ERCOT and is scheduled to be heard at 11 a.m. on March 23, 2021.

While in effect, the temporary restraining order prohibits ERCOT from utilizing the “uplift” mechanism.

Background:

On Feb. 25, the City of Denton filed suit against the Electric Reliability Council of Texas (ERCOT) in the District Court of Denton County seeking to prevent the unconstitutional use of public funds. The City of Denton owns and operates Denton Municipal Electric (DME).

ERCOT is using a mechanism within its protocols known as “uplift.” Due to the recent record-high wholesale energy prices, some ERCOT market participants have failed to pay ERCOT for power purchases. Ultimately, uplift may spread the costs of those ERCOT market participants to other market participants, including DME.

The City views the payment of the costs of other utilities as an unconstitutional gifting of public funds and unconstitutional lending of its credit.

Late Thursday, Feb. 25, 2021, the district court granted a Temporary Restraining Order in favor of the City of Denton in this matter.

The City of Denton will explore all legal options to protect the financial assets of the City and its ratepayers from improper use. As this is a pending legal matter, there is currently no additional information or comment.

The City of Denton will provide updates when available. Visit www.cityofdenton.com/ERCOT for information.

Contact: Ryan Adams, (940) 349-8565, Ryan.Adams@cityofdenton.com

Source: City of Denton