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ERCOT Seeks Court Order to Compel Bankrupt Retail Provider to Accept Market Participant Agreement To Protect Market From Uplift
ERCOT has petitioned a federal bankruptcy court to compel Glacial Energy to assume, or reject, various "executory contracts" with ERCOT, including the Standard Form Market Participant Agreement, in order to preserve ERCOT's standard remedies to protect the market against uplift should a market participant fail to meet additional collateral requirements or fail to perform, including the transition of customers to Providers of Last Resort.
Although Glacial posted an additional $400,000 in collateral with ERCOT in June, ERCOT said that the "automatic stay" provisions of the bankruptcy code hinder ERCOT's ability quickly react in response to a potential Glacial Energy default, absent Glacial's assumption of the executory contracts.
ERCOT also expressed concern that Glacial's posting of additional collateral may be challenged by other parties as an improper post-petition transfer under the bankruptcy code.
Accordingly, ERCOT asked that the court compel Glacial to either accept or reject the executory contracts.
"If the Executory Contracts are assumed, ERCOT requests that assumption be conditioned on the Debtors curing any monetary and/or nonmonetary defaults and providing Adequate assurance of future performance under the Executory Contracts including, without limitation, posting any additional collateral required and complying with all other provisions of the ERCOT Protocols and a finding that the Additional Collateral posted on or about June 5, 2014 was made in the ordinary course of business in accordance with the DIP Order. Furthermore, as part of the assumption of the Executory Contracts, ERCOT shall be entitled post-assumption to enforce all rights and remedies under the Executory Contracts, the ERCOT Protocols, and applicable law, without the necessity of first seeking relief from the Bankruptcy Court," ERCOT said.
Although ERCOT "prefers" that the executory contracts be assumed by Glacial, and that Glacial operate in the ordinary course of business in accordance with the executory contracts and the ERCOT Protocols, if the executory contracts are rejected, ERCOT requested that the court grant ERCOT immediate relief from the automatic stay of section 362(d) of the bankruptcy code to terminate the Executory Contracts, to proceed with any market settlements and/or resettlements and apply the collateral to any amounts due and owing by Glaical, and so that ERCOT shall be entitled to enforce all rights and remedies under the executory contracts, the ERCOT Protocols, and applicable law including without limitation immediately moving any residential and commercial end-user customers and wholesale customers to Providers of Last Resort.
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September 8, 2014
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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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