Panda PowerFunds LP is suing the Electric Reliability Council of Texas Inc. over"false and misleading" market reports, which the company said led itto make over $2 billion of erroneous investments in power plants.
The company first filed a fraud, breach of duty andnegligent misrepresentation lawsuit Feb. 29 in the 15th Judicial District Courtin Grayson County, Texas. In an amendedpetition March 15, Panda Power asserted that ERCOT used Capacity,Demand & Reserves, or CDR, reports and similar misrepresentations regardingthe ERCOT market to persuade the company to invest "staggering sums ofmoney toward electric power generation."
Panda Power said it and its project companies investednearly $2.2 billion to build three power plants based on ERCOT'srepresentations in the reports. Only after those investments were made andconstruction had begun on the power plants did ERCOT admit that its"earlier representations were false, with devastating consequences"to Panda Power, the company said.
"The earlier statements were made negligently orfraudulently and possibly to further expectations of special or personalinterests," Panda Power said. It added that if the claims were not madenegligently or fraudulently, ERCOT should be held responsible for notdisclosing the falsity sooner.
ERCOT is an ISO charged with ensuring the reliability andadequacy of the regional electric network and "must function independentlyof political influence, or the influence of any particular producer or sellerof electricity," Panda Power said.
To guarantee that independence, "ERCOT's articles ofincorporation bind each of its directors to act as fiduciaries for ERCOT andits members, producers and suppliers alike," including Panda Power, thecourt document said.
In an email ERCOT spokeswoman Robbie Searcy said ERCOT will"vigorously defend its position" when it responds to the lawsuit."The lawsuit is based on a misunderstanding of the purpose of ERCOT's CDRreports, how the reports are prepared in accordance with the methodology in theERCOT protocols, and the open and public stakeholder discussion ERCOT goesthrough before changing components of the CDR," Searcy said.
Panda Power has two natural gas combined-cycle power plantscurrently operating in Texas, the 795-MW Sherman plant, and the 1,544-MW Templeplant. Both facilities came online in 2014, according to SNL Energy data. Thecompany is adding another 450 MW of capacity to the Sherman plant. Both theSherman and Temple plants have been operating at a capacity factor of around46%, which is close to recent reported annual capacity factors for similarpower plants. U.S. Energy Information Administration data from December 2015shows that combined-cycle gas plants in 2015 achieved an average capacityfactor of 56% and 48% in 2014 and 2013, respectively.