Precedent Setting Appeal Before Texas Public Utility Commission

We won a precedent setting appeal before the Texas Public Utility Commission involving a decision of the Electric Reliability Counsel of Texas (ERCOT) on behalf of our clients West Oaks Energy and Longhorn Energy. This PUCT decision rejected a retroactive market resettlement that had been ordered by ERCOT, resulting in a $10 million price reversal for our clients and others. In this case, ERCOT adjusted settled market prices, on a retroactive basis, for the December 1, 2010 through February 1, 2011 period , claiming there had been a “significant software or data error” that justified the price change. In the appeal to the PUCT we demonstrated that in fact there was no software or data error, simply an unhappiness on ERCOT’s part with how its own market design was functioning. The PUCT, by unanimous vote, agreed with us and also agreed that while prospective rule changes are needed from time to time it is extremely harmful to market participants, and to market confidence, to try and make these changes on a retroactive basis. This decision has also led to a potential reversal of a second market resettlement that was ordered by ERCOT. In that second case, and on behalf of firm client XO Energy TX, we had challenged an almost identical retroactive market resettlement as unlawful and contrary to system protocols. This second resettlement involved over $2.7 million. At ERCOT’s request this matter is now being held in abeyance until the next ERCOT Board meeting when it will be reconsidered. We are delighted with these outcomes and believe the PUCT decision is likely to put an end to unwarranted, after the fact price changes in the ERCOT market. We believe it also establishes very important precedent for all ISO electricity markets.