NOTICE
DATE: September 24, 2008
NOTICE
TYPE: M-A092408-01
General
CLASSIFICATION:
Public
INTENDED
AUDIENCE: All ERCOT Market
Participants
DAY
AFFECTED: September 24,
2008
LONG DESCRIPTION:
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 (http://www.reservefund.com/index.shtml).
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(http://www.reservefund.com/pdfs/Press%20Release%20Statement%20of%20Order%20Purpose%202008_0923.pdf) 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
(http://www.reservefund.com/pdfs/Press%20Release%202008_0916.pdf), 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.”
CONTACT:
If you have any questions, please
contact your ERCOT Account Manager. You may also call the general ERCOT Client
Services phone number at (512) 248-3900 or contact ERCOT Client Services via
e-mail at [log in to unmask].
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