Texas Lt. Gov. Opposes Partial Settlement Filed In ERCOT Uplift Securitization Proceeding

Lieutenant Governor of Texas Dan Patrick has written a letter to Texas PUC Commissioners opposing a partial settlement in a PUC proceeding concerning an "uplift" financing program as directed by HB 4492 due to the settlement not calculating cost exposure during the winter storm on a "net" basis

The partial settlement is unopposed by parties to the proceeding

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")

In allocating funds under the financing program, the previously reported settlement (story here) would not require the netting of exposure versus any proceeds received by LSE affiliates (such as generation) during the storm. However, the settlement does include a weighting that favors smaller, unaffiliated retail electric providers

See full details on the allocation methodology under the settlement here

In the letter to the PUC, Patrick wrote, "I am writing you in opposition to the proposed settlement agreement in the application of ERCOT for a debt obligation order to finance uplift balances related to Winter Storm Uri, Docket 52322. I support the portion of the settlement agreement that prioritizes and securitizes retail electric providers that are not affiliated with power generation and who did not profit during the winter storm. However, any portion of the proposed settlement agreement that does not calculate cost exposure on a net basis, as was the intent of the Texas Senate when it passed House Bill 4492, is unacceptable."

"You will recall, I wrote you on August 11, 2021, regarding the legislative intent for HB 4492, the legislation authorizing the potential debt obligation order. In that letter I urged you to follow the plain meaning of HB 4492 as the Texas Senate considered and passed it, and calculate cost exposure on a net basis."

Patrick noted that 20 Texas State Senators also separately signed a letter to the PUC stating that netting is required under the bill

"Despite these letters, the proposed settlement agreement does not take into account netting or the profits made by some of the entities entitled to receive funds under the proposed settlement agreement. Therefore, I ask you not to approve the proposed settlement agreement and instead go back to the drawing board to find a solution that considers profits and losses before any distribution of securitization funds. The Texas Senate would not have passed a bill that gave money to companies that profited during the winter storm. The people of Texas deserve accountability and companies that profited during the winter storm. The people of Texas deserve accountability and a clear and transparent solution. A company seeking to benefit from the securitization provided under HB 4492 should be willing to verify their net exposure during the winter storm," Patrick wrote in the latest letter to the PUC

"It is imperative that any debt obligation order approved by the Commission take into account any profits gained and losses incurred in order to determine an entity's exposure. Substantial portions of the proposed settlement do not follow the legislative intent of the law. Therefore, I urge you to find a solution that does," Patrick wrote

Docket 52322