CPS Energy Strengthens Lawsuit Against ERCOT In Light Of Recent Actions; Court Grants Temporary Restraining Order Preventing ERCOT From Passing On Unlawful Charges

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Apr 29, 2021, 22:06 ET

SAN ANTONIO, April 29, 2021 /PRNewswire/ -- Yesterday, CPS Energy took swift action when it learned new facts and actions announced by the Electric Reliability Council of Texas (ERCOT); the utility filed a strengthened, amended lawsuit against ERCOT in Bexar County District Court to protect customers from excessive, illegitimate, and illegal power prices. In addition to the filing of the amended complaint, the Court granted CPS Energy's request for a temporary restraining order, further protecting its customers from ERCOT's latest attempt to pass on unlawful charges.

CPS Energy is a municipally owned utility. Through its owner, the City of San Antonio, the utility acts as an agent for all its customers, who are not in a position to challenge the systemic failures of the state's energy market. The utility does not have stock investors. The money the company makes stays in San Antonio, Texas and ultimately gets reinvested back into operational and service improvements.

"Texas prides itself on being an energy state. To retain that mantle, we need to reform the state's systemic inadequacies that caused the weather crisis, which could result in the most massive wealth transfer in Texas history," said Ron Nirenberg, Mayor of San Antonio, Texas. "In San Antonio, we are going to exhaust every avenue we have, including through the courts, to ensure the burdens of this crisis are not borne by the people who suffered through it, the residents of Texas."

Strengthened Lawsuit against ERCOT

CPS Energy first filed claims against ERCOT on March 12, 2021 for its lack of oversight, preparedness, and failure to follow its own protocols that resulted in $16 billion in overcharges to market participants and customers. ERCOT has since admitted that it could have corrected the $16 billion error by repricing within 30 days of Winter Storm Uri, but instead allowed the 30-day window for corrections to pass. This choice came despite the Independent Market Monitor for the Public Utility Commission of Texas (PUCT) – which oversees ERCOT – twice verifying ERCOT's error. ERCOT has added insult to injury by taking the remarkable step of adding $6 million of undercharges to bills, citing an apparent software glitch during Winter Storm Uri, thereby underscoring that it will subjectively reprice errors when it benefits their organization, but not when it doesn't.

"ERCOT can and should have repriced the $16 billion in overcharges that were charged during a declared disaster. Instead, it has doubled down on former Chair Arthur D'Andrea's promise to Wall Street to not correct the error. ERCOT continues to show its ability and willingness to reprice when it suits ERCOT, but refuses to reprice when it rightfully favors San Antonio and Texas customers," said Paula Gold-Williams, President & CEO of CPS Energy.

Temporary Restraining Order Granted

ERCOT's unprecedented pricing error and its latest string of mismanagement decisions has supercharged energy uncertainty and driven numerous market participants into bankruptcy or out of business. Late in the day on April 27, 2021, ERCOT notified market participants across Texas, including CPS Energy, that it would begin taking posted collateral to cover the charges that other market participants have not paid.

ERCOT's attempts to collect these charges from CPS Energy's customers is an unlawful extension of CPS Energy's credit and is a direct violation of the Texas State Constitution. Per the Constitution, a city-owned utility cannot be asked to unlawfully extend its credit to help settle the debts of other entities, especially in cases where there is no chance of being repaid. CPS Energy also wants to ensure that its customers never have to pay for the defaults of other market participants caused by ERCOT's excessive pricing and acknowledged $16 billion error.

On the afternoon of April 28, 2021, CPS Energy was granted a temporary restraining order. This successful step forward prevents ERCOT from adjusting, extending, or otherwise affecting CPS Energy's credit in preparation for passing on these additional charges until the Court conducts a further hearing on the matter.

"ERCOT's latest unilateral and aggressive move is an attempt to unlawfully force our customers to pay for the insolvency of other market participants, caused by ERCOT's own mistakes," continued Gold-Williams. "Disappointingly, ERCOT continues to inject uncertainty into the market while failing to address its errors, which is contributing to one of the largest illegal transfers of wealth in the history of Texas. To help correct this problem, CPS Energy will continue to work tirelessly to put its customers first."

Additional Information

When available, a copy of the filing can be found on the company's website. CPS Energy will also provide relevant updates, as major developments occur.

Previous updates about how CPS Energy is working to protect customers can be found here:

March 2, 2021 Update
March 5, 2021 Update
March 12, 2021 Update
March 18, 2021 Update
March 23, 2021 Update
CPS Energy and the Texas Electric Market

About CPS Energy
Established in 1860, CPS Energy is the nation's largest public power, natural gas, and electric company, providing safe, reliable, and competitively-priced service to 860,934 electric and 358,495 natural gas customers in San Antonio and portions of seven adjoining counties. Our customers' combined energy bills rank among the lowest of the nation's 20 largest cities – while generating $8 billion in revenue for the City of San Antonio for more than seven decades. As a trusted and strong community partner, we continuously focus on job creation, economic development, and educational investment. True to our People First philosophy, we are powered by our skilled workforce, whose commitment to the community is demonstrated through our employees' volunteerism in giving back to our city and programs aimed at bringing value to our customers. CPS Energy is among the top public power wind energy buyers in the nation and number one in Texas for solar generation.

SOURCE CPS Energy