Simpson Thacher advised the Railroad Commission of Texas in connection with the issuance of a Financing Order that authorizes the securitization of approximately $3.4 billion of extraordinary gas costs in connection with Winter Storm Uri. The securitization will prevent huge spikes in gas bills for more than 4 million residential and 260,000 commercial customers by amortizing the high cost of gas incurred during Winter Storm Uri. Without securitization, the extraordinary gas costs would be passed-through to customers by natural gas utilities, without markup, over a period of one to twelve months, depending on the utility. This program, authorized under Texas HB 1520, will instead spread these extraordinary gas costs over a period of years.
It is expected that the customer rate-relief bonds will be issued by a special purpose vehicle within six-months, with proceeds being used to reimburse participating gas utilities, including Atmos Energy Corporation, CenterPoint Energy Resources Corp. and Texas Gas Service Company, a division of ONE Gas, Inc., for their extraordinary gas costs.
The Railroad Commission of Texas is the state agency with primary regulatory jurisdiction over the oil and natural gas industry, pipeline transporters, natural gas and hazardous liquid pipeline industry, natural gas utilities, the LP-gas industry, and coal and uranium surface mining operations.
The Simpson Thacher team included Matthew Einbinder, Amy Beller, Ron Havas, Megan Bourassa, Braxton Duhon and Ian Simrod (Banking and Credit); John Schueller (Capital Markets); Michael Mann (Tax); and Nicholas Baker (Restructuring and Bankruptcy).