Texas PUC Clarifies Retail Providers' Ability To Access, Use Securitization Proceeds For Own REP Costs
June 16, 2022 Email This Story Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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During today's open meeting, the Texas PUC clarified retail electric providers' ability to access and use their proceeds under the winter storm Uri securitization to pay third parties and offset their own internal costs
As previously reported (see details here), PUC Staff issued a memo concerning how retail electric providers shall distribute proceeds from the winter storm Uri bond securitization, including treatment for former customers, and requirements for compliance reporting (Docket 52710)
To effectuate PURA's provisions, Staff said that the use of debt obligation bond proceeds must utilize the following order of priority:
1. Refunds or offsets to an LSE's retail customers that paid or were obligated to pay qualifying costs. If a load-serving entity is not allocated 100% of its total exposure, any refunds or adjustments to retail customer invoices must be made in an amount that is not less than an amount that is proportionate to the percentage of the load-serving entity's total exposure that was allocated to that load-serving entity.
2. Fulfilment [sic] of payment obligations to third-party entities that financed payment of the qualifying costs.
3. Reimbursement to the LSE for its payment of qualifying Costs.
During the meeting, Commissioner Lori Cobos asked whether a REP had to complete the customer refund process, under item #1, before it could use funds for items #2-3 (third-party payments and the REP's own costs); or if the REP could earmark the required money for customer refunds, and to the extent there are proceeds remaining, move on to items #2 and #3 while the refund process is being completed
Cobos noted that a REP's refund process may not be complete until November 2023 under the timeline contemplated by Staff. Under one interpretation of the payment priority order, REPs theoretically would not be able to access, for REPs' own benefit, any funds not needed for customer refunds until late 2023 when the refund process is completed
During the discussion, Staff and all Commissioners agreed that so long as a REP earmarks and sets aside the needed funds to satisfy all customer refund obligations, the REP may immediately use any remaining proceeds for item #2, and if funds are still available, item #3, even if the customer refund process has not been completed
The Commission also emphasized that if the REP does not exhaust all its proceeds owed to customers through refunds (such as being unable to locate a switched, former customer), the REP may not use such earmarked refund money for any other purpose, and must submit such unused refund proceeds to ERCOT. The disposition of such funds will be subject to further Commission order