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City of Denton v. Electric Reliability Council of Texas, Cause No. 21-1421-16

On February 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 manages the statewide electric grid in Texas.

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. The City of Denton will explore all legal options to protect the financial assets of the City of Denton and its ratepayers from improper use.

Lawsuit Status

DENTON, TX, April 9, 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.

A hearing date regarding a temporary injunction has been rescheduled for April 26, 2021 at 9 a.m. in the 353rd District Court in Travis County. 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.

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