Denton Energy Center

Denton Energy Center

With a July 6 deadline approaching for Denton to refile its lawsuit against the Energy Reliability Council of Texas after it was dismissed last month, city officials may opt to end the case.

That is according to Ryan Adams, Denton’s director of customer service and public affairs.

“We have not refiled our petition and have not received council direction to do so,” Adams said. “Several bills from the recent state legislative session significantly address the city’s concerns. The city will monitor how that legislation is implemented and take any future action as needed.”

A Travis County judge dismissed Denton’s lawsuit that claimed ERCOT was using uplift — a 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 February’s winter storm would have its debt pushed onto other cities.

Denton’s lawsuit contended that “cities are barred from making such payments.” The city filed the suit after the city’s publicly owned utility, Denton Municipal Electric, spent $207 million to buy three days’ worth of electricity from ERCOT. DME’s annual budget is $231.4 million.

In May, a Travis County judge heard ERCOT testimony on a plea to abatement — essentially an objection to the place and time of a legal action. The previous month, ERCOT in Denton County had argued it is not the proper venue for the suit, and a hearing was scheduled for May 10 in the 250th Judicial District Court. City officials had until July 6 to appeal the dismissal.

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 price 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 mid-February’s rotating power outages, Denton City Council members gave the additional OK to allow DME to borrow up to $300 million to cover costs incurred during the storm.

Meanwhile, ERCOT’s website shows customers are under no conservation alert. Under current conditions, the state’s power grid has “enough power for current demand.”

The next Denton City Council meeting is scheduled for July 20.

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

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