Updated: Texas House Considers Securitization Bill Which Could Be Broadly Open To Retail Electric Providers & Their Costs From Winter Storm, Other ERCOT Market Participants

Texas House Considers Securitization Bill Which Could Be Broadly Open To Retail Electric Providers & Their Costs From Winter Storm, Other ERCOT Market Participants

* This is a breaking news alert. This story will be updated as noted below with later developments. You may need to refresh your page to see the latest update

Updated, 7:21 pm ET

HB 4492 was left pending in committee

In testimony, a representative for a commercial real estate company generally favored the concept of the bill, including allowing REPs to be eligible, but said that the bill should ensure that any relief provided to REPs is then passed on by REPs to customers, and that, for integrated companies with generation and a REP, any securitization should net out any windfall profits the generation business received during the winter event

Earlier:

During a meeting today, the Texas House State Affairs committee considered HB 4492, a securitization bill which could be expanded to include retail electric providers

As filed, the bill refers to "electric utilities," and states that the securitization applies to, "extraordinary costs that electric utilities incurred and may incur to secure electric supply and provide service during natural and man-made disasters, system failures, and other catastrophic events..."

However, discussion among the committee revealed that the intent of the filed bill was to generate ideas and discussion about what costs and what entities should be eligible for securitization, and not necessarily limited to utilities. Rep. Chris Paddie, Chair of the committee and author of the bill, said that the bill is a work in progress. Members indicated that they are considering expanding the universe of entities eligible for securitization -- potentially including retail electric providers and generators

A witness for the Texas Energy Association for Marketers spoke in favor of the bill, suggesting that securitization could be used for ancillary services costs (especially those above $9,000) billed to REPs which would otherwise be billed to customers.

Securitization could also address REP costs incurred during the period of time that energy prices administratively remained at $9,000 after ERCOT ceased load shed (for which re-pricing has not been approved)

Uplift costs, otherwise borne by REPs, could also be securitized

Although not reflected in the current bill's language, one proposal would be creation of a special purpose entity to pool securitization of all eligible entities in the market

Securitized costs would be recovered via nonbypassable charge

A previously reported separate securitization bill that is specific to cooperatives (HB 3544) was also considered during the committee meeting

As of publication time, the committee was still taking testimony on the bill. This story will be updated once the committee finishes hearing testimony and with any action taken by the committee