Denton Energy Center

While Denton Municipal Electric paid the Electric Reliability Council of Texas more than $200 million for energy during Winter Storm Uri in February, the Denton Energy Center provided ERCOT energy in return. According to the most recent data available, DEC garnered nearly $566,000 in revenue. Since October, it has received $4.8 million in revenue.

A temporary restraining order against the Electric Reliability Council of Texas remains after its attorneys challenged that the 353rd Judicial District Court in Travis County is the proper venue in the lawsuit the city of Denton filed against ERCOT in February.

“ERCOT filed a plea to the jurisdiction and an alternative plea abatement, which I understand to mean the court has no jurisdiction,” said Ryan Adams, Denton’s director of customer service and public affairs. “A hearing regarding this will be … on May 10.”

On Monday, Judge Madeleine Connor was scheduled to rule on whether a temporary injunction should be issued against ERCOT.

“The hearing that was to occur on [April 26] regarding the temporary injunction will now be held on June 1, pending any decisions made on May 10,” Adams said. “Until that time, the temporary restraining order will remain in effect.”

The temporary restraining order was imposed by 16th Judicial District Court Judge Sherry Shipman in February in Denton County. Weeks later, she granted ERCOT’s motion for transfer, sending the case to Travis County.

The temporary restraining order prohibits ERCOT from using the uplift mechanism by which it “spreads the cost” of municipalities unable to pay exorbitant energy bills onto other municipalities, including Denton. For example, a city unable to pay part or all of its energy bill to ERCOT because of the sky-high costs imposed during the weather event in February would have its debt pushed onto other cities.

The city of Denton contends “cities are barred from making such payments.” It filed the suit after Denton Municipal Electric spent $207 million to buy electricity from ERCOT. DME’s annual budget is $231.4 million.

According to documents, the average price of energy per megawatt-hour in February was $23.73. During the rotating outages that began around the state on Feb. 15, that increased to $2,400 per megawatt-hour.

Denton staff members on Feb. 19 issued $100 million in new debt “to meet immediate cash flow needs” for DME. During the 2019-20 fiscal year, DME spent almost $64 million on power purchases. That compares with just over $97 million the previous year. The utility is carrying about $851 million in debt, in general obligation bonds, revenue bonds and certificates of obligation.

A little more than a week after rotating power outages began in February, Denton City Council members gave the OK to allow DME to borrow up to $300 million to cover costs incurred during the storm.

Ultimately, the city is seeking a permanent injunction that would, in part, keep ERCOT from demanding payments to cover others’ debts and keep ERCOT from taking action against the city for not making those payments. The temporary injunction would do the same at least until trial.

When a winter storm moved across Texas in mid-February, ERCOT nearly collapsed because of frozen power plants and record demand for electricity, according to published reports. To prevent that from happening, the agency mandated rotating power outages among its member cities, including Denton, where residents went without electricity anywhere from 30 minutes to over an hour intermittently from Feb. 15-17 under ERCOT’s Energy Emergency Alert Level 3.

PAUL BRYANT can be reached at 940-566-6881 and via Twitter at @paulbryant_DRC.

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