Texas House Approves Bill That Would Authorize PUC To Securitize ERCOT Default, Uplift Charges -- EnergyChoiceMatters.com

Texas House Approves Bill That Would Authorize PUC To Securitize ERCOT Default, Uplift Charges

May 6, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Texas House has passed HB 4492 which would create a mechanism for the Public Utility Commission of Texas to authorize the securitization of ERCOT market uplift charges related to the winter weather event

The bill awaits action in the Senate

HB 4492 includes the following definitions:

"Default charges" means nonbypassable amounts to be charged on all wholesale market transactions administered by the independent organization certified under Section 39.151 for the ERCOT power region, approved by the commission under a financing order to recover qualified costs, that shall be collected by the independent organization, its successors, an assignee, or other collection agents as provided by the financing order.
"Load-serving entity" means a municipally owned utility, an electric cooperative, or a retail electric provider.
"Period of emergency" means the period beginning 12:00 a.m., February 12, 2021, and ending 11:59 p.m., February 20, 2021.
"Qualified costs" means a default balance resulting from the period of emergency that otherwise would be or has been uplifted to other wholesale market participants, together with the costs of issuing, supporting, and servicing bonds and any costs of retiring and refunding existing debt in connection with the issuance of the bonds.
"Uplift charges" means charges for reliability deployment price adders and ancillary services costs in excess of the commission's system-wide offer cap that were uplifted to load-serving entities on a load ratio share basis due to energy consumption during the period of emergency. The term includes only uplifted amounts and does not include amounts that were part of the prevailing settlement point price.

Under HB 4492, the PUC may adopt a financing order to recover the costs of a substantial default or uplift balance of qualified costs resulting from a significant pricing event on making a finding that such financing is needed to preserve the integrity of the wholesale market and the public interest

Nonbypassable default charges must be collected and allocated among wholesale market participants using the same allocation methodology described in the protocols of the independent organization, as they existed on March 1, 2021. The rate associated with the nonbypassable default charges must be assessed on all wholesale market participants, including market participants who are in default but still participating in the wholesale market, and must be based on updated transaction data to prevent market participants from engaging in behavior designed to avoid the nonbypassable default charges.

Nonbypassable uplift charges must be allocated to all load-serving entities on a load ratio share basis, excluding the load of entities that have opted out under the process described below

The PUC shall develop a process that allows a load-serving entity and any customer whose demand is greater than one megawatt and is served by a retail electric provider to opt out of the uplift charges by paying in full all invoices owed for usage during the period of emergency. Load-serving entities and individual customers that opt out may not receive any proceeds from the uplift bonds.

A financing order shall include terms ensuring that the imposition and collection of default or uplift charges authorized in the order shall be nonbypassable, other than uplift charges paid under the opt-out process

Under the bill, all load-serving entities that receive offsets to specific uplift charges from the independent organization under this subchapter must adjust customer invoices to reflect the offsets for any charges that were or would otherwise be passed through to customers under the terms of service with the load-serving entity, including by providing a refund for any offset charges that were previously paid

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