Session 3: An Overview of Securitization
Due to sustained scarcity pricing during Winter Storm Uri, a number of financially distressed market participants were unable to meet their payment obligations to ERCOT, resulting in a $3 billion shortfall at ERCOT. In House Bill 4492, the Texas Legislature authorized ERCOT to establish a debt financing mechanism to finance up to $800 million in default balances as well as up to $2.1 billion to finance the high costs of ancillary services and reliability deployment price adders. In this session, the panel will explore the related proceedings and the proposed settlement currently pending before the PUCT. The speakers will discuss the mechanics of securitization, the allocation methodology for the Load Serving Entities, implications for the munis, coops and REPs who “opted out,” the impact to electricity customers, and the implications for the ERCOT market.