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Updated: The following story is brought free of charge to readers by EC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com
Update, 4:45 pm ET
The text of SB 1757 has been posted, and the securitization authorized under the bill relates to uplift that would otherwise occur in the ERCOT market
SB 1757 provides, "The purpose of this subchapter is to
enable the independent organization [ERCOT] certified under section 39.151
to use securitization financing to fund substantial balances that
would otherwise be uplifted to the wholesale market as a result of
market participants defaulting on amounts owed after an extreme
pricing event."
"Securitization will allow wholesale market
participants who are owed money to be paid in a more timely manner,
while allowing the balance to be repaid over time at a low carrying
cost," SB 1757 states
"The proceeds of the bonds shall be used solely for the
purposes of financing default balances that would otherwise be
uplifted to the wholesale market," SB 1757 states
"The commission [PUC] shall ensure that
securitization provides tangible and quantifiable benefits to
wholesale market participants, greater than would have been
achieved absent the issuance of bonds. The commission shall ensure
that the structuring and pricing of the bonds result in the lowest
bond charges consistent with market conditions and the terms of the
financing order. The amount securitized may not exceed the present
value of the revenue requirement over the life of the proposed bond
associated with default balances that are sought to be securitized," SB 1757 states
SB 1757 would establish "nonbypassable default charges" to recover the costs of the financing used for securitization, with such nonbypassable charges, notably, applying to wholesale market transactions
Under the bill, "default charges" means nonbypassable amounts to
be charged on all wholesale market transactions administered by the
independent organization certified under section 39.151 [ERCOT], approved
by the PUC 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 for
in the financing order
SB 1757 provides that nonbypassable default charges, "shall be collected and
allocated among wholesale market participants on the same basis
that they would otherwise be uplifted pursuant to the protocols of
the independent organization"
Earlier:
Texas State Sen. Kelly Hancock, Chair of the Business & Commerce Committee, announced a series of bills to address the winter weather event, including SB 1757, which is described as follows: "Protects ratepayers by establishing a securitization pathway for ERCOT participants"
A caption for the bill reads, "Relating to securitizing costs of electric services or electric markets."
Text of the bill was not immediately available on the Texas legislative site
Notably, however, is that Hancock's legislative package also includes a separate bill, SB 1580, which is described as follows: "Protects ratepayers by establishing a securitization pathway for electric cooperatives."
As such, since SB 1580 addresses cooperatives specifically, SB 1757 may address a wider universe of ERCOT market participants, such as retail electric providers (or their QSEs), though, as noted, text of SB 1757 is not yet available and it's unclear what relief the bill will provide.
The co-op bill, SB 1580, states, "The purpose of this subchapter is to
enable electric cooperatives to use securitization financing to
recover extraordinary costs and expenses incurred because of the
abnormal weather events from 12:01 A.M. on February 12 through
11:59 P.M. on February 20, 2021."
The co-op bill, SB 1580, would establish nonbypassable charges to pay the bonds, stating, "A financing order shall include
terms ensuring that the imposition and collection of transition
charges authorized in the order shall be nonbypassable and shall
apply to all customers connected to the electric cooperative's
system assets and taking service, whether or not the system assets
continue to be owned by the electric cooperative."
Part of Hancock's slate of bills is the previously reported SB 1279, which would provide that a retail electric provider may not offer wholesale indexed products to residential customers
As first reported by EnergyChoiceMatters.com on March 10, SB 1279 defines "wholesale indexed product" as meaning, "a retail electric product that includes in the rates charged for electricity a direct pass through of real time settlement point prices calculated for the ERCOT power region."
Hancock's slate of bills also includes the previously reported SB 415 which, as introduced, would allow for TDUs to contract for energy storage for distribution-related service, but prohibit the PUC from authorizing TDUs to own storage. See discussion of SB 415 in our prior story here. As of publication time, no public amendment to SB 415's text had been posted to the extent there has been any change since introduction.
Hancock's slate of bills also includes the following. The description is based on the version of the bill as-filed, unless otherwise noted
SB 1278 - provides that ancillary services costs incurred
by the ERCOT independent system operator to address reliability
issues arising from the operation of intermittent wind and solar
resources must be directly assigned by the ERCOT independent system
operator to those resources
SB 1281 - subjects transmission that is not needed for reliability, or included in an adopted CREZ plan, to a comparison of the
estimated cost of the transmission project "for consumers" and the
estimated cost savings "for consumers" that may result from the
transmission project (adding the term "for consumers" to existing statue).
SB 1282 - provides that capital costs incurred to interconnect with the ERCOT
transmission system generation resources and electric energy
storage resources described by Section 35.152(a), including costs
of utility interconnection facilities and all necessary system
upgrades, must be directly assigned by the ERCOT independent system
operator to the generation resource or electric energy storage
resource receiving interconnection service through the facilities.
SB 1579 - creates a securitization pathway for retail natural gas customers & prices (Railroad Commission)
SB 1682 / SJR 62 - text not available; said to propose a constitutional amendment to create the State Utilities Reliability Fund for weatherization improvement projects
SB 1749 – text not available; said to require critical gas infrastructure mapping and improve communication and coordination between natural gas and electric regulators
SB 1750 - said to establish new severe weather preparedness standards and requirements for critical electric and natural gas infrastructure
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Securitization Under New Texas Bill Would Only Be Used For ERCOT Uplift
Texas Sen. Hancock Announces Bill That Provides, "Securitization Pathway For ERCOT Participants"
Slate Of Bills Includes Ban On Real-time Wholesale Pass-Through Retail Electric Products
March 12, 2021
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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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