Title
Consider and take action on a resolution of City of League City (“City”) authorizing the City to participate as part of a coalition of cities in proceedings to be held by the Railroad Commission of Texas related to implementation of House Bill 1520 (City Attorney)
Background:
On June 16, 2021, Governor Greg Abbott signed House Bill 1520, which directs the Railroad Commission of Texas and the Texas Public Finance Authority to work together to issue bonds, the proceeds of which gas utilities would use to pay for the extraordinary cost of natural gas charged ratepayers during the winter storm of February, 2021.
HB 1520 provides financial relief to gas utilities that choose to apply for the bonds by potentially providing a low-cost source of financing to fulfill outstanding obligations to natural gas suppliers. Any bonds issued under the authority of HB 1520 are to be secured by a mandatory charge on each gas-utility customer’s bill and revenue from such mandatory charge is to be dedicated to paying off the bonds. The bonds would allow customers to pay over an extended period, rather than potentially through a single billing statement, for the extraordinary cost of gas consumed during the winter storm of February, 2021. The amount of debt to be issued to pay the gas utilities and in turn the natural-gas suppliers is estimated to be in the range of $4 billion to $5 billion.
To implement HB 1520, the Railroad Commission issued a “Notice to Operators” to all gas utilities in the State directing all gas utilities that elect to participate in the debt financing of their extraordinary gas purchased during the winter storm of February, 2021, to submit their applications to the Railroad Commission by July 30, 2021.
RAILROAD COMMISSION PROCEEDINGS
The applications the gas utilities will file with the Railroad Commission is expected to be voluminous and will include data related to each gas utility’s costs of gas, its practices regarding the purchase of natural gas, i...
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