City of Denton Lawsuit Against ERCOT Moved to Travis County

Date of Hearing on Temporary Injunction to be Determined


DENTON, TX, March 22, 2021 – The lawsuit filed by the City of Denton against the Electric Reliability Council of Texas (ERCOT) has moved from Denton County to Travis County. A motion to transfer venue was originally scheduled to be heard at 11 a.m. on March 23; however, per the City’s existing contract with ERCOT, both parties have agreed to the transfer.


Prior to the move to Travis County, a hearing date regarding a temporary injunction had been scheduled for April 30, 2021. That hearing date will be rescheduled in Travis County, though a date has yet to be set. Until that time, the temporary restraining order will remain in effect. While in effect, the temporary restraining order prohibits ERCOT from utilizing the “uplift” mechanism.


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.


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.

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