NOTICE DATE: December 10, 2021

NOTICE TYPE: W-B112921-02 Financial/Credit

SHORT DESCRIPTION: Standard Form Letter of Credit for Satisfying Securitization Default Charge Credit Requirements under PURA Chapter 39, Subchapter M

INTENDED AUDIENCE: All Counter-Parties

DAYS AFFECTED: December 10, 2021

LONG DESCRIPTION: On December 10, 2021, the ERCOT Board of Directors (Board) approved Nodal Protocol Revision Request (NPRR) 1103, Securitization – PURA Subchapter M Default Charges, and a new standard form letter of credit that may be used for Securitization Default Charge escrow deposits authorized by the Debt Obligation Order (DOO) in PUC Docket No. 52321, Application of Electric Reliability Council of Texas, Inc. for a Debt Obligation Order pursuant to Chapter 39, Subchapter M, of the Public Regulatory Act.

NPRR1103 requires Counter-Parties (CPs) to, at all times, maintain Securitization Default Charge escrow deposits at or above the amount of the CP’s Securitization Default Charge Credit Exposure (SDCCE). Moreover, each CP is required to maintain any required Securitization Default Charge escrow deposit in a form acceptable to ERCOT, specifically cash or an unconditional, irrevocable letter of credit naming Texas Electric Market Stabilization Funding M LLC (TEMSFM) as the beneficiary.

ERCOT will email each CP its estimated initial escrow deposit amount on or before December 20, 2021. ERCOT will also issue a follow-up Market Notice containing details regarding the date on which ERCOT will issue actual escrow deposit requests and the deadline for providing the requisite escrow deposits.

The standard form letter of credit form that must be used for satisfying Securitization Default Charge credit requirements is attached hereto and can also be found under “Financial Security Documents” at https://www.ercot.com/services/rq/credit. In addition, CPs can find information regarding banking/wiring instructions applicable to Securitization Default Charges in the MIS Secure Area under the “Requested Information” folder.

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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