Stable Grid Texas
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 and grid.
House Bill (HB) 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.
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.
All electricity providers billing these securitization and firm fuel supply charges will pass them on to the Electricity Reliability Council of Texas (ERCOT). As a result, Hudson Energy customers will see separate line items for these charges on their monthly bills. These line items are “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 this legislation, 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 HB 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.
Uplift charges are designed to preserve the 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.
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. All electricity providers billing these firm fuel supply charges will pass them on to the Electricity Reliability Council of Texas (ERCOT).
How does Hudson Energy determine the charge amounts?
Hudson Energy calculates the charges per customer using the securitization and 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 ERCOT securitization and firm fuel supply charges, each REP will have unique rates.
These charges are subject to change based upon actual future ERCOT billings to Hudson Energy for securitization and firm fuel supply charges. The total charge will be rounded up or down to the nearest cent before it is reflected on your bill.
Is Hudson Energy the only electricity company billing these charges?
No. All REPs are billed the legislature-approved securitization and firm fuel supply charges from ERCOT. Other REPs may choose to adjust their energy rate or charge as a separate line item on the bill.
How long will the charges be added to the monthly bills?
Texas House Bill 4492 authorizes all Texas REPs to bill customers securitization charges for the next 30 years. 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.
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.
For more information, please review ERCOT’s informational page here.
Last Update: March 6, 2023