Texas Senate Bill SB2227

Texas 2021 - 87th Regular

Caption

Relating to securitizing costs associated with electric markets; granting authority to issue bonds.

Impact

The impact of SB2227 on state laws includes the establishment of the Texas Electric Securitization Corporation, a special-purpose entity dedicated to facilitating the financing of certain electric market costs. This corporation will operate independently of state funds and will be self-sustaining, refraining from borrowing from the state directly. The bill precludes the Texas state government from being liable for the bonds issued, thereby protecting the state's financial interest while providing necessary liquidity to the market.

Summary

SB2227 focuses on the securitization of costs arising from electric markets and grants the authority to issue bonds for this purpose. The bill seeks to provide a financial mechanism that allows market participants to recover extraordinary ancillary service and reliability deployment charges incurred during significant pricing events, particularly those surrounding the February 2021 energy crisis. By enabling timely payments to wholesale market participants through the issuance of bonds, the bill acts as a solution to the cash flow challenges they face due to delayed receipts.

Contention

There may be notable points of contention surrounding SB2227 regarding its potential implications for consumers and the electric market's transparency. Critics may argue that securitization could lead to higher long-term costs for consumers as these uplift charges are passed through in their utility bills. Furthermore, ensuring that the financing provides tangible benefits demonstrates the need for diligence in how this mechanism is structured to avoid adverse consequences in the power market.