What is that new line-item charge on my bill?

New charges always lead to new questions. What are these charges for, where did they come from, are they permanent, and how much will it cost us?

Here is a simplified explanation of ERCOT Securitization, and how it affects your energy cost.

As a result of the high commodity prices the market experienced during Winter Storm URI in 2021, many energy suppliers were left with extremely high bills to settle their accounts with ERCOT. Some even defaulted.

To minimize the potential damage, in 2021 the Texas Legislature passed two measures — Subchapter M and Subchapter N — under House Bill 4492 Securitization. The bill outlines the financing of approximately $3 billion to stabilize the Texas electricity market.

One of the new charges, Subchapter M, is for Default. That is, the Public Utility Commission of Texas authorized ERCOT to finance a “default balance” that includes unpaid amounts owed to ERCOT by competitive market participants.

The other charge, Subchapter N, is for Uplift. PUCT authorized ERCOT to finance an “uplift balance,” which is an amount not greater than $2.1 billion for certain extraordinary costs incurred by Load Serving Entities (LSEs) related to Winter Storm Uri.

The result? Two new charges that retail customers will pay for the next 30 years.

Some suppliers may just combine the two costs and label it ERCOT Securitization Charge on your monthly invoice. The costs will vary by month, but we see the cost ranging between $0.50 to $0.90 per MWh.

Are these dollars going to help make our grid more secure? No, this is just about debt financing. There were other impacts from URI like ERCOT Winter Weatherization protocols, changes to ancillary service obligations, and even ongoing legislation to reform the ERCOT market design. Those changes aren’t finalized yet so they will be a story for another day.

If you are interested in learning more, please contact us today.