ERCOT Securitization Bill Line Items

In the aftermath of the February 2021 Winter Storm Uri, the Texas legislature has enacted laws and authorized financial mechanisms that provide needed funds to stabilize the Texas electricity market. House Bill 4492 authorizes all Texas electricity providers to bill customers securitization charges for the next 30 years.  Securitization measures are effective after a catastrophe because they spread the cost over many years and minimize the impact on customers.  All electricity providers billing these securitization charges will pass them on to the Electricity Reliability Council of Texas (ERCOT).

As a result, Hudson customers can expect to see two new line items on their monthly bills. These line items are “Securitization default charges” and “Securitization uplift charges.”

We realize that many of our customers will not be familiar with House Bill (HB) 4492 or securitization, so we have put together some helpful resources to assist our customers in getting a better understanding.

Frequently Asked Questions & Links 

What is the purpose of the securitization charges?

One of the financial mechanisms created under House Bill 4492 is a bond that provides funds to cover the cost of the electricity scheduled for customers during the Texas Winter Storm Uri.  All electricity providers billing these securitization charges will pass them on to the Electricity Reliability Council of Texas (ERCOT) as a mechanism to repay the bond.

How does Hudson determine the charge amounts?

Hudson calculates the securitization charges using the amount of the biannual bond repayment due to ERCOT and the anticipated usage by customers over the period. Therefore, Hudson customers can expect the rate to change every six months.

Since each Retail Electricity Provider (REP) has a different bond repayment amount, each REP will have a unique rate.

The current Securitization Default Charge is $ 0.0000188 per kWh. Securitization Uplift Charges will be reflected on your bill within the next few months. These amounts are subject to change during a contract term. The total charge calculation will be rounded up or down to the nearest cent before it is reflected on your bill.

Is Hudson the only electricity company billing the securitization charges?

All electricity companies participating in the legislature-approved bond will repay the funds through the securitization charges.

How long will the securitization charges be added to the monthly bills?

House Bill 4492 authorizes all Texas electricity providers to bill customers securitization charges for the next 30 years.  This extended timeframe allows minimal impact on the customer’s overall bill.

Is it possible to opt-out of this charge or get a credit?

Because Texas Winter Storm Uri was a natural event, no opt-out mechanisms or credits are available for customers for this legislature-approved regulatory pass-through charge.

Commercial premises with a transmission voltage meter during the time of the winter storm were notified by their provider and given the opportunity to opt-out of securitization charges. Premises that opted out should provide notice to Hudson at the time of signing a contract so that their billing can be properly set up.