Denton Municipal Electric wants a finer tool for managing what it pays for power, and the City Council is set to decide Tuesday whether to give it one.
An ordinance on the council's consent agenda for Oct. 27 would approve a participant and clearing agreement with ElectronX, an electricity exchange based in Chicago that also has an office in New York. The city-owned utility would use it to trade power derivatives, financial contracts tied to electricity prices that let a buyer guard against price swings without taking delivery of any power.
Why the utility wants it
According to the staff report, DME currently does that kind of trading on two commodity platforms, Intercontinental Exchange (ICE) and ICE NGX. Both sell power only in standard eight-hour blocks covering peak hours, off-peak hours or weekend peak hours.
ElectronX lets participants trade in blocks as short as one hour. Staff wrote that this would let DME buy coverage for just the hours when its supply portfolio falls short, instead of paying for a full eight-hour block to cover a gap that may last only part of a day.
The exchange was founded in 2022 and falls under the Commodity Futures Trading Commission, the federal regulator of derivatives trading, the report says. Like ICE, it uses a collateral account model: participants post money up front, and the exchange holds that collateral to back every trade.
Cost and oversight
The agreement attached to the ordinance calls for a $25,000 initial deposit to open the account unless ElectronX waives it, plus exchange and clearing fees under the company's posted fee schedule. Either side can end the agreement with written notice.
