Energy Management

ERCOT Webinar: News Your Business Can Use

3 min read

In the recent ERCOT Market Webinar, several Constellation market analysts, and regulatory and sales experts discussed a variety of topics related to the Texas energy market and ERCOT, including:

  • 2021 summer forecast, including El Niño Southern Oscillation ENSO, a weak La Niña and the widespread western drought’s impacts on Texas
  • An ERCOT market review including a look at Winter Storm Uri and the associated outages
  • An outlook on the ERCOT summer 2021 reserve margin and that of 2022-2023
  • And the latest from Austin on the ERCOT market fallout.

Watch the webinar to learn more about these topics by visiting our resources page. Additionally, our market analysts wanted to share two pieces of breaking news that have a potential to impact customers.

Listen to the full webinar

Breaking News: PUCT Proposal to Modify Low System-wide Offer Cap

The Public Utility Commission of Texas (PUCT) has proposed to modify the value of the low system-wide offer cap (LCAP), which is in effect for the rest of the year, by “eliminating a provision that ties the value of LCAP to the natural gas price index and replacing it with a provision that ensures resource entities are able to recover their actual marginal costs in scarcity pricing situations. The proposed LCAP will be set at $2,000/MWh. During an event when the system-wide offer cap is set to the LCAP, ERCOT must reimburse resource entities for any actual marginal costs in excess of real-time revenues.”1 The high system-wide offer cap (HCAP), which resets at the beginning of 2022, would remain at $9,000/MWh. The PUCT is taking comments on the proposed rule, with a public hearing tentatively set for June 10th.

Breaking News: Texas House and Senate Bills on Energy Debt Securitization   

On May 3rd, the Texas Senate held hearings on SB 2227, a bill that would securitize the energy and ancillary prices (above $9,000/MWh) at the time ERCOT ceased calling for rotating outage at approximately 11:55 p.m. on February 17th and later recalled the $9,000/MWh pricing and ended the energy emergency alert (EEA) 3 at 9 a.m. CST on February 19th. The bill would securitize over a 30-year period the costs associated with the 32 hours. On May 6th, the Texas House of Representatives voted 129 to 15 for HB 4492, a House version of SB 2227, that would allow for the securitization of cost associated with Winter Storm Uri. Specifically, the bill would allow for securitization of the $2.9 billion default debt at ERCOT, as well as ancillary services (AS) above $9,000 MWh and the real-time deployment price adder (RDPA) from 12:00 a.m. on February 12th through 11:59 p.m. on February 20th. The bill does contain an opt-out provision if customers paid their bill(s) in full for the timeframe covering the period.

Potential “opt out” amendments may be proposed where entities could opt out of paying the debt securitization. Customers should be aware of these amendments for two reasons: first, allowing the opt-out would concentrate the costs on a smaller number of customers—thus increasing the charges to the non-opt-out entities; second, ERCOT voluntarily chose to keep pricing at the cap to ensure enough system reliability for the entire market.

Additionally, the House is also considering a bill that would allow electric cooperatives to cover their defaults outside of the securitization, which if passed would lower securitization under HB 4492 to around $400 million. As a matter of principal, both the House and the Senate agree that the electric cooperatives should securitize their own portions of any defaults and recoup the cost from their ratepayers.

Listen to the full webinar


  1. Project No. 51871 – Review of the ERCOT Scarcity Pricing Mechanism.

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