Market securitization charges are a new line item on Texas electricity bills. They’re a direct outcome of Winter Storm Uri, paying for some of the extraordinary costs of that storm. You can’t avoid paying these fees, which are from a regulatory change. But you might as well understand them, since you’ll be paying them for the next 30 years.
Legislative Changes from Winter Storm Uri – HB4492
Winter Storm Uri in February 2021 had devastating consequences for Texas citizens. Power was out for days in may areas of that state, causing death and property damages.
During the storm, power prices surged to the market cap of $9,000 per kWh and stayed that high for days, at the order of the Public Utility Commission. Ancillary charges, which are in addition to wholesale power prices, also surged. Many retail electricity providers were unable to meet their financial obligations. Fearing a destabilization of the Texas electricity market, regulators took action.
In October 2021, they passed HB4492 and authorized the Electricity Reliability Council of Texas to finance unpaid debts. HB4492 added two new sections to Chapter 39 of the Public Utility Regulatory Act.
- Subchapter M finances the “default balance” of $800 million. That covers costs for unpaid debts for electricity companies that went out of business due high energy costs. This went into effect in January 2022.
- Subchapter N finances the “uplift balance” of $2.1 billion for extraordinary costs incurred by electricity companies during Winter Storm Uri.
ERCOT assigned each retail electricity provider (REP) in Texas a portion of this cost, based the portion of electricity load they served during Winter Storm Uri. Since this is a regulatory change, REPs can pass along the charges to consumers.
That means consumers like you will pay this cost over the next 30 years, as line items on your bill.
Market Securitization Charges on Texas Electricity Bill
You may notice two line items on your bill, effective since January 2022 and July 2022:
- Market Securitization Debt Financing (Default) – This is a result of the default balance from Winter Storm Uri.
- Market Securitization Debt Financing (Uplift) – This is the result of extraordinary costs (uplift) from Winter Storm Uri.
If you are shopping for electricity, you may see these charges included on the Electricity Facts Label for the plan you are reviewing. Or you may not.
Unfortunately, the Public Utility Commission of Texas has been silent on whether these fees must be line itemed on your bill. And they haven’t required REPs to list them on the EFL.
But regardless of whether you see securitization on the EFL? You may be paying these costs. Most REPs are passing through these costs to consumers.
Fees collected from these securitization charges are paid directly to ERCOT by your REP.
How Much is the Market Securitization Charge?
The amount of the securitization debt financing on your bill varies by REP. That’s because each REP pays a different share of the ERCOT securitization costs based on their number of customers and total load (usage) served.
Since the costs are spread out over 30 years, the cost your monthly bill is very small. It’s fractions of a penny per kilowatt hour.
TEAM (Texas Energy Association of Marketers) has estimated the cost at $.44/MWh or $0.00044 per kWh or less than $1 per 1000 kWh.
Is Market Securitization a Pass Through Allowed by Law?
Under Texas Public Utility Commission regulations, residential and small business consumers are protected against any changes in their fixed rate electricity contracts. But that’s the energy portion of your electricity bill.
REPs can pass through changes in delivery charges from your local utility company. And they can pass through ERCOT charges that are due to changes in law. The market securitization charge is considered a change in law.
As of March 2023, the PUCT is reviewing whether this change in law may be passed through to consumers. Stay tuned!