Denton spent more than $200M on electricity during winter storm. Now it’s suing ERCOT
Denton is fighting a court battle against ERCOT, alleging that it is unconstitutional to use public funds to pay utility costs when energy providers defaulted on making their payments.
During a period from Feb. 16 to Feb. 19, Denton Municipal Electric (DME) purchased more than $207 million in energy from the Electric Reliability Council of Texas (ERCOT).
In late February, Denton sued ERCOT alleging that the Electric Reliability Council could use a mechanism called Uplift.
Uplift is a system where ERCOT can charge electricity providers if others don’t pay.
During the winter storm, when wholesale prices for utilities reached record high levels, some electricity providers failed to make their payments to ERCOT.
The lawsuit alleges that ERCOT could spread those costs to other markets. On Tuesday, there was a hearing in the 16th District Court in Denton County where State District Judge Sherry Shipman extended to April 30 a temporary restraining order which prevents ERCOT from using Uplift.
ERCOT also filed a motion for a change of venue, and a hearing is scheduled for March 23.
Denton owns and operates Denton Municipal Electric, and in a letter on the city’s website, described how the city was prepared for the winter storm.
Before the winter storm hit, the city took steps to make sure there was enough electricity and natural gas in place, but on Feb. 15, the natural gas for generating electricity was “cut off” by the supplier, and Denton had to purchase electricity from ERCOT at “record setting” prices of over 10,000 percent higher than in 2020, according to information on the city’s website.
The electric company operates the Denton Energy Center, a natural gas generating station, and sells renewable energy to ERCOT from its contracts with wind and solar farms. DME provided power to ERCOT and was paid, and when needed the DME purchased electricity from ERCOT.
According to the letter, the sale of energy helps offset the costs for Denton’s customers.
“This number is staggering when compared to DME’s annual budget of $50-$65 million for the purchase of electricity,” the letter stated.
This story was originally published March 9, 2021 at 4:30 PM.