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Texas PUC Approves Settlement On Allocation Of Uplift Securitization Proceeds To LSEs In ERCOT

Adopts Order Addressing Other Issues


October 13, 2021

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

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The Texas PUC adopted a final debt obligation order authorizing an "uplift" financing program for ERCOT as directed by HB 4492

HB 4492 creates a program to finance, and provide funds to LSEs, Reliability Deployment Price Adder ("RDPA") charges and Ancillary Service costs above the Commission's system-wide offer cap for the period beginning 12:01 a.m., February 12, 2021, and ending 11:59 p.m., February 20, 2021 (known as "uplift")

The PUC adopted without modification a previously reported settlement addressing the methodology and process for allocation of securitization proceeds to load serving entities

As more fully detailed in our prior story, the settlement does include a weighting that favors smaller, unaffiliated retail electric providers. Up to $2.1 billion in securitization proceeds will be allocated to LSEs that have not opted out on a load ratio share (LRS) basis using the methodology described in the adopted settlement

As previously reported, the settlement includes an obligation for REPs to pass-through proceeds to affected customers, as described in our prior story linked below

See our prior story here for full details on the methodology and process for allocation of securitization proceeds to load serving entities and related terms

With respect to issues not addressed in the settlement, the PUC's order, which did not include any substantive changes versus a prior draft, provides that the servicer (initially ERCOT) will assess uplift charges (to recover costs financed under the program) to each QSE that represents one or more obligated LSEs based on the load ratio share of the obligated LSEs represented by the QSE.

The methodology to be utilized by the servicer for the assessment of uplift charges is set forth below:

a. The servicer will determine the periodic billing requirement that must be billed for any given period. The periodic billing requirement will be updated at least annually, and on an interim basis from time to time in accordance with the true-up procedures described in this Order.

b. The servicer will amortize the periodic billing requirement daily for the given period. This amount is referenced in this Order as the daily amortization amount.

c. The servicer will assess the daily amortization amount to each QSE as a daily charge, based upon the initial settlement data for the load ratio share of each obligated LSE represented by the QSE.

The adopted settlement also addressed eligible REP and customer opt-outs from the financing program, including the process and notification to customers from REPs of such eligibility; see our prior story here for such terms which were approved without modification

Docket 52322

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