Securitization N

Topics

By STEVE REEDY

The Gist

Securitization N is a term used to describe a set of payouts and charges designed to lessen the economic impact of certain charges that were assessed to Load Serving Entities (LSEs) during Winter Storm Uri. House Bill 4492 amended (among other things) Subchapter N of section 39, utilities code, to allow ERCOT to get $2.1B of financing to disburse to load serving entities and to be repaid by all load serving entities (excepting those that opted out of the initial disbursement) over the next 30 years.

The $2.1 were disbursed to load serving entities based on their gross (i.e. non-netted) exposure share of 1) RDPA Uplift charges and 2) A/S Charges over $9000/MWh during the “period of emergency”, February 12th – 20th inclusive. LSEs that did not have resources that got A/S revenue recovered all of their exposure via the disbursement, LSEs that had not very much A/S revenue during the period of emergency recovered less of their exposure, and LSEs that had a lot of A/S revenue recovered even less of their exposure.

Going forward, all load serving entities that received disbursement (and new load serving entities that joined after the event) will be responsible for paying back the securitization bonds based on a daily load ratio share (of the non-opted out entities).

Important Actions

2/12-20/21 Period of Emergency – exposure to A/S prices over $9000 and uplift of Reliability Deployment Price Adders
3/11/21 Independent Market Monitor files memo with the PUC detailing pricing issues during Winter Storm Uri
7/16/21 Public Utility Commission opens up project 52322 to determine methodology of enacting HB4492
10/13/21 Public Utility Commission approves the debt obligation order
12/29/21 ERCOT files NPRR1114
2/16/22 Cleanup NPRR shared with CWG MCWG

3/9/22 ERCOT introduces cleanup NPRR1122 at PRS
3/14/22 ERCOT introduces NPRR1125(Allow general collateral to be used to cure securitization defaults)

Reference

HB4492 language

https://interchange.puc.texas.gov/Documents/51812_149_1115720.PDF Memo from Independent Market Monitor describing problematic pricing that eventually led to securitization

NPRR1114(ERCOT)

Draft cleanup NPRR

NPRR1123(Actual cleanup NPRR)

NPRR1125(Allow general collateral to be used to cure securitization defaults)