Texas Senate Bill SB1950

Texas 2021 - 87th Regular

Caption

Relating to the use of securitization by electric cooperatives to address extraordinary costs and expenses resulting from Winter Storm Uri.

Impact

The legislation aims to amend existing statutes related to utility financing, establishing a structure for electric cooperatives to issue securitized bonds that specifically cater to the costs arising from the winter storm. This includes not only the costs of energy procurement during the emergency but also operational expenses that were incurred due to the extreme conditions. By implementing this financing structure, cooperatives can potentially lower their overall financing costs, benefitting both the cooperatives and their consumers in the long run.

Summary

SB1950 seeks to address the financial implications faced by electric cooperatives in Texas due to extraordinary costs incurred during Winter Storm Uri, which took place from February 12 to February 20, 2021. The bill introduces a new subchapter to the Utilities Code that enables electric cooperatives to utilize securitization financing. This mechanism will allow them to recover these unforeseen expenses more effectively than traditional financing methods. By doing so, the bill aims to alleviate financial pressures on these cooperatives while ensuring the stability of electric services in the aftermath of such extreme weather events.

Contention

While proponents of SB1950 argue that it provides a necessary financial tool for electric cooperatives, critics may raise concerns regarding the implications of securitization on consumer costs. The safeguards built into the bill, requiring cooperatives to ensure that the benefits of securitization outweigh costs for their members, may face scrutiny. There is also a general apprehension about the equitable distribution of costs associated with recovery through transition charges, potentially leading to debates on fairness among customers connected to these electric systems.