Retail Vet: Texas Retail Market Will Lose More Than 20 REPs If Senate Committee Substitute For House's ERCOT Securitization Bill Adopted

Committee Substitute Omits Ancillary Service Charges From Included Costs

May 21, 2021

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

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The Texas Senate Business & Commerce Committee has drafted a committee substitute to HB 4492 which would omit ancillary service charges, such as those ultimately charged to retail electric providers, from the costs addressed by the relief provided by the bill

As previously reported, HB 4492 as passed by the House, provided for a securitization process, and included in the costs eligible for securitization the following: "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."

The committee substitute uses a loan from a state fund to pay certain short-pays in ERCOT (default invoices). However, the bill would not include the above-described ancillary service costs, from the House version of the bill, in the costs covered by the loan

This omission of ancillary services was apparently in response to concerns about "socializing" such costs to all customers via securitization, and imposing costs on residential customers and/or fixed price customers. Additionally, there is a concern that the bill would disincentivize utilities with captive customers, such as co-ops, from finding alternative financing for such costs

Speaking against the committee substitute version of the bill during a committee meeting, Marcie Zlotnik said, "we will not have," a competitive retail market if the issue of the ancillary service costs assigned to REPs is not addressed.

"We're going to lose probably 20 more retailers," with Zlotnik noting that there are only about 30 REPs in the mass market

The committee left the substitute pending in committee

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