In the aftermath of record electricity demand events, the Texas legislature and the Electricity Reliability Council of Texas (ERCOT) have enacted laws and authorized financial mechanisms that provide needed funds to stabilize the Texas electricity market and grid.

House Bill (HB) 4492 authorizes all Texas electricity providers to bill customers Securitization charges for the next 30 years in the aftermath of Winter Storm Uri. Securitization measures are effective after a catastrophe because they spread the cost over many years and minimize the impact on customers.

Senate Bill (SB) 3 authorizes all Texas electricity providers to bill customers Firm Fuel Supply charges from November 15th through March 15th of each year. Firm Fuel Supply Service allows for the funding necessary to ensure grid stability during extreme cold weather conditions.  

ERCOT’s Nodal Protocol Revision Request (NPRR) 863 created a new ancillary service, ERCOT Contingency Reserve Service (ECRS). ECRS will support grid reliability and mitigate real-time operational issues to balance supply and demand.

As a result, Hudson Energy customers will see separate line items for these charges on their monthly bills. These line items are “ERCOT Contingency Reserve Service,” “Market Securitization Debt Fin. (Default),” “Market Securitization Debt Fin. (Uplift),” and “Annual Firm Fuel Service Supply Charges.”
  

We realize that many of our customers will not be familiar with the legislation and ERCOT NPRR, so we have put together some helpful resources to assist our customers in getting a better understanding.

Frequently Asked Questions & Links

SECURITIZATION

What is the purpose of the securitization charges?
One of the financial mechanisms created under HB 4492 is a bond that provides funds to cover the cost of the electricity scheduled for customers during the Texas Winter Storm Uri. Securitization charges are directly passed through from the Electricity Reliability Council of Texas (ERCOT) as a mechanism to repay the bond.

Uplift charges are designed to preserve market stability by protecting against future weather and price emergency events. Default charges allow for electricity providers to continue offering competitive rates through spreading out the repayment of securitization bond costs.

How does Hudson Energy determine the charge amounts of securitization?
Hudson Energy calculates the charges per customer using the Securitization charge amounts billed by ERCOT and the usage incurred by customers over the period. Since each Retail Electricity Provider (REP) has a different share of the Securitization charges, each REP will have unique rates.

These charges are subject to change based upon actual ERCOT billings to Hudson Energy. The total charge will be rounded up or down to the nearest cent before it is reflected on your bill.

FIRM FUEL SUPPLY

What is the purpose of the Firm Fuel Supply charges?
Senate Bill (SB) 3 covers winterization requirements for municipally owned utilities, electric cooperatives, and power generators. The Firm Fuel Supply charges cover the cost of these yearly winterization efforts as well as ensure enough electricity supply sources are on hand to meet the high demands that may result from a winter emergency. Firm Fuel Supply are directly passed through from the Electricity Reliability Council of Texas (ERCOT).

How does Hudson Energy determine the charge amounts for Securitization and Firm Fuel Supply?
Hudson Energy calculates the charges per customer using the Firm Fuel Supply charge amounts billed by ERCOT and the usage incurred by customers over the period. Since each Retail Electricity Provider (REP) has a different share of the Firm Fuel Supply charges, each REP will have unique rates.

These charges are subject to change based upon actual ERCOT billings to Hudson Energy. The total charge will be rounded up or down to the nearest cent before it is reflected on your bill.

ERCOT CONTINGENCY RESERVE SERVICE

What is the purpose of the ERCOT Contingency Reserve Service (ECRS) charges?
ECRS is the final piece of ERCOT’s 2019 Nodal Protocol Revision Request (NPRR) 863, aiming to stabilize the grid. When dispatched by ERCOT, the ECRS will stabilize the grid’s frequency and capacity within 10 minutes of an event and provide necessary sustained assistance for up to 2 hours.  

How does Hudson Energy determine the charge amounts for ECRS?
ERCOT distributes the cost of ECRS among Retail Electricity Providers (REP), using each provider’s customers’ share of the total market usage to determine their portion of the ECRS cost. Hudson Energy then calculates your share of the ECRS cost based on your account’s electricity usage without adding any additional fees or markup. This ensures that you’re only responsible for your portion of the charges billed by ERCOT for the ECRS service.

The service operates based on market conditions. Under normal market conditions, the estimated cost will be in line with other ancillary services. However, the cost may increase during high demand or scarcity periods.

ALL CHARGES

Is Hudson Energy the only electricity company billing these charges?

No. All REPs are billed the legislature approved ECRS, Securitization and Firm Fuel Supply charges from ERCOT. Some REPs may choose to include these components into the energy billing rate or charge as a separate line item on monthly bills.

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

Texas House Bill 4492 authorized all Texas REPs to bill customers Securitization charges for the 30 years, beginning in 2021.  This extended timeframe allows minimal impact on the customer’s overall bill.

Texas Senate Bill 3 authorizes all Texas REPs to bill customers Firm Fuel Supply charges from November 15th to March 15th each year.

ERCOT’s ECRS charges are now in effect as of June 2023.

Is it possible to opt-out of these charges or get a credit?

There are no opt-out mechanisms or credits available for customers for these legislatures approved, regulatory pass-through charges.

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 Energy at the time of signing a contract so that their billing can be properly set up.

For more information, please review ERCOT’s informational page
HB 4492 Securitization.
Firm Fuel Supply.
ERCOT Ancillary Services.    

Last Update: July 13, 2023