What House Bill 4492 Means for Texas Consumers

HB4492 was passed by the Texas Legislature last year in response to Winter Storm Uri. This allowed for the financing of $2.1B “for certain extraordinary costs incurred by Load Serving Entities (LSEs) related to Winter Storm Uri” and another $0.8B for “certain unpaid amounts owed to ERCOT….related to Winter Storm Uri”.

The bill allows ERCOT to pass these new costs back to electric suppliers who can, in turn, pass them back to customers. ERCOT is just beginning the process of notifying retail suppliers that there will be new costs. Because these costs are related to a legal change, most energy plans that a customer may have signed up for, allow the supplier to pass this cost along to the end customer. The exact impact of these costs on an individual's bill is still TBD.

Link to ERCOT HB4492 https://www.ercot.com/about/hb4492securitization

These new costs fall into two categories – Securitization Charges and Increased Ancillary Service Obligations.

Securitization Charges

In short, there was a large portion of funds designed to help keep the energy market more stable. 

In response to the Winter Storm Uri, the PUCT (as directed by the Texas Legislature) authorized ERCOT to obtain approximately $3 billion in bond funds for the market.  These funds will be focused on ensuring the strength and stability of the wholesale and retail Texas power markets.  ERCOT will assess these charges to market participants, including retail electric providers who can pass these charges on to their customers.

Increased Ancillary Service Obligations

In short, there is an increased cost in wholesale electricity as a result of changes being made to prevent future outages.

Starting in July 2021 and continuing into 2022, ERCOT has been increasing the amount of certain ancillary services that suppliers must purchase.  The increase reflects ERCOT’s efforts to improve grid stability.  The key grid-stabilizing ancillary service obligations were the responsive reserve service and non-spin ancillary service charges.  Under your contract, these changes in law created ancillary service cost increases and are charged to suppliers based on customer usage.

How will this affect my electric bill? 

You will likely receive a notification from your energy provider about the effects of HB4492. Many providers will be increasing their rates to reflect their increased costs. The amount of the increase will depend on your provider and plan but expect a 10% or more increase. 

My rate is “locked-in” though right? 

Even if you have a fixed rate or “locked-in” pricing you could still see an increase in your rate. Your energy plans contract has language that allows the provider to adjust the rate if there is a change in the law that drastically increases their wholesale pricing.