ERCOT Takes Actions to Confirm Asset Security
The Electric Reliability Council of Texas, Inc. (ERCOT), grid operator for most of the state, notified The Reserve, a major money-market investment management company, of intentions to file suit to protect ERCOT’s and ERCOT market participants’ assets invested with The Reserve. But ERCOT announced that the suit will not be needed in light of an acknowledgment received today from The Reserve.
”ERCOT received notice from The Reserve late this afternoon acknowledging ERCOT’s rightful priority in securing the return of funds invested in two of the company’s money-market funds, the U.S. Government Fund and the Primary Fund, regardless of the Securities and Exchange Commission order that was entered after ERCOT’s redemption request and that freezes certain redemptions in these two funds until the assets can be repaid at full value,” CEO Bob Kahn said. “This confirms ERCOT’s belief that ERCOT’s investments are secure,” Kahn said.
“ERCOT’s redemption request was placed prior to the published decline in Primary Fund asset values by The Reserve, and we believe that all ERCOT assets in both the Primary Fund and U.S. Government Fund will be repaid dollar for dollar once liquidity returns to the financial markets,” Kahn said. “We asked the board Tuesday for authorization to file suit to preserve the favorable payment priority that ERCOT rightly obtained by acting quickly to place its redemption/liquidation requests.”
“ERCOT does not anticipate any impact to normal market operations,” Kahn said. “We are committed – with the Public Utility Commission’s backing – to ensuring the continued liquidity of the ERCOT market.”
The ERCOT board authorized litigation against The Reserve in a unanimous vote at an urgent board meeting Tuesday afternoon. The meeting included no open session discussion other than the vote to authorize litigation against The Reserve.
“The board has acted and will continue to act to make sufficient funds available for market operations and obligations, including the use of our credit facilities,” ERCOT Board Chairman Mark Armentrout said. “We will work with the Public Utility Commission to ensure the smooth operation of ERCOT market activities.”
ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. Its members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities, transmission and distribution providers and municipally owned electric utilities.