NOTICE DATE: June 8, 2022

NOTICE TYPE: M-A060822-01 General

SHORT DESCRIPTION: PURA Chapter 39, Subchapter N Bonds final pricing has occurred today, June 8, 2022.  Closing (which includes funding) is projected to occur on June 15, 2022.

INTENDED AUDIENCE: All Market Participants

DAYS AFFECTED: June 8, 2022 and thereafter

LONG DESCRIPTION: In accordance with the provisions of Texas Public Utility Regulatory Act (PURA) Chapter 39, Subchapter N and the Public Utility Commission of Texas (PUCT) Debt Obligation Order issued in Docket No. 52322, Application of Electric Reliability Council of Texas, Inc. for a Debt Obligation Order Pursuant to Chapter 39, Subchapter N, of the Public Utility Regulatory Act, the special purpose entity (SPE), Texas Electric Market Stabilization Funding N LLC, is progressing towards the issuance of Subchapter N Bonds totaling approximately $2.1 billion.  Electric Reliability Council of Texas, Inc. (ERCOT) is acting as the Sponsor of the transaction and the Initial Servicer of the Subchapter N bonds. 

The Subchapter N Bonds will be issued in four tranches, with respective weighted average lives of approximately 7, 16, 22, and 26 years.  The final tranche will have a legal final payment date of no more than 30 years after issuance.  Moody’s Investors Service has granted a provisional rating of Aaa(sf) for each of the four tranches. A final rating will occur at Closing.

Today, June 8, 2022, the Subchapter N Bonds received final pricing as follows:

Tomorrow, ERCOT will file the Issuance Advice Letter with the PUCT in PUCT Project No. 52710.

The Subchapter N transaction is anticipated to close and fund on June 15, 2022.

The asset that will back the Subchapter N Bonds is the Uplift Property established by the PUCT Debt Obligation Order, which is the right to impose, collect, and receive non-bypassable Uplift Charges from all Responsible Qualified Scheduling Entities (QSEs), representing all Obligated Load Serving Entities (LSEs).  The State of Texas has pledged that they will take no action to impair the value of the Uplift Property.  ERCOT will, among other servicing obligations, periodically adjust the Uplift Charges - also known as a mandatory true-up adjustment - through the PUCT. 

After the issuance of the Subchapter N Bonds, ERCOT will distribute the proceeds to Obligated LSEs, via their designated Responsible QSEs, that demonstrated to the PUCT that they were exposed to qualifying, extraordinary costs because of the supply and demand imbalance caused by generation outages during Winter Storm Uri in February 2021.  ERCOT anticipates that the distribution of the proceeds will occur to the responsible QSEs on June 22, 2022.  

The initial billing of Uplift Charges to Responsible QSEs may commence no sooner than the first month following the initial issuance of the Subchapter N Bonds.  Currently, the initial billing of Uplift Charges is anticipated to begin August 1, 2022. 

Biannual interest payment dates to bondholders will occur on February 1 and August 1, or the first bank business day thereafter if those dates are not bank business days, commencing February 1, 2023.

CONTACT: If you have any questions, please contact your ERCOT Account Manager. You may also call the general ERCOT Client Services phone number at (512) 248-3900 or contact ERCOT Client Services via email at ClientServices@ercot.com.

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mm/dg