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City gets $3.7 million settlement

Profile image for By Peggy Heinkel-Wolfe
By Peggy Heinkel-Wolfe

Dispute resolved over money owed to Denton electric ratepayers

NRG Power Marketing has agreed to pay $3.7 million to settle a dispute with Denton over money owed to the city’s electric ratepayers.

The City Council approved a settlement document this week after a successful court-ordered mediation. Dave Knox, spokesman for NRG, said the company was pleased the dispute was resolved amicably.

“We are very satisfied,” Knox said.

Denton sued NRG last year, claiming the company withheld about $3.3 million owed to the city’s electric ratepayers. The lawsuit ended up in the 16th District Court. District Judge Sherry Shipman scheduled the matter for trial but ordered the parties to mediation first.

In approving the final settlement Tuesday, council members thanked Mayor Chris Watts for joining the city’s attorneys in the mediation talks. An attorney, Watts has served as a negotiation coach at Texas A&M University School of Law.

Whether the settlement provides any relief to electric ratepayers remains to be seen. The city’s electric fund receives and spends about $170 million each year. The City Council votes on the budget and utility rates in September.

Denton Municipal Electric contracted with NRG after most of the state’s electrical grid became deregulated in 2010. NRG represented DME on the state’s electric grid until DME could begin buying and selling electricity directly in October 2014.

The Electric Reliability Council of Texas, or ERCOT, wrote rules to help the state’s electric grid remain reliable as it was deregulated.

NRG and other companies qualified, through credit-worthiness and other requirements, to buy and sell electricity right away. It took a few years for DME to qualify.

In other words, until DME could serve as its own brokerage in the Texas energy marketplace, NRG was the city’s broker in buying, selling and moving electricity through the grid to Denton ratepayers from 2011 to 2014.

In setting up the deregulated marketplace, ERCOT also wrote some rules to be fair to ratepayers. Ratepayers in Denton and elsewhere paid for the electric infrastructure that was brought into the deregulated marketplace.

ERCOT pays credits for that infrastructure, particularly when demand for electricity is high, to be fair to the ratepayers who paid for it. The city alleged NRG withheld $3.3 million in those credits from Denton ratepayers.

NRG is a publicly traded energy company that generates most of its electricity from coal, oil and natural gas power plants. Based in Houston and Princeton, New Jersey, the company also owns the nuclear power plant in Bay City.

Wind and solar power make up about 8 percent of the company’s generation.

In the settlement agreement, Denton and NRG agreed to release each other of future claims. NRG’s payment to Denton, which is payable within the next 30 days, also settles the attorney and court costs the city incurred pursuing the claim.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter at @phwolfeDRC.

IN OTHER ACTION

In addition to approving the settlement this week, the Denton City Council also:

Renewed its tax collection contract with the law firm Sawko & Burroughs for two years.

Authorized a new joint operating agreement with Texas Municipal Power Agency, which specifies how Denton, Garland, Greenville and Bryan will manage the likely sale of a coal-fired power plant they own jointly.

Amended an agreement with Teague, Nall & Perkins for additional engineering services needed for two new water lines for an additional $93,000.

— Peggy Heinkel-Wolfe