The rule accepts three forms of interconnect security. The election is a liquidity, rating, and bank decision, not a checkbox.

Under adopted 16 TAC §25.194, interconnect financial security may be posted only as cash collateral, a rated guaranty, or a rated letter of credit. Cash can credit from the intermediate agreement into the SLLIA posting. A guaranty or LOC is returned at allocation and must be funded fresh. Batch Zero Verification RFI Load Type E and G question trees then ask different evidence for each path. Treat the election as capital mechanics before the next irreversible campus spend.

This piece is not a restatement of the §25.194 dollar gates, the 20 percent energization return schedule, or CIAC cash rules. Those amount and return instruments are covered in the adoption article. It is also not the Batch Zero exhibit / submitter split, the tariff / hedge exposure piece, or the customer-built switchyard drawdown cost-to-complete test. This article is about the form election itself: cash versus qualified guaranty versus letter of credit, and how that choice binds liquidity, rating floors, and bank capacity before Verification asks for proof. Rating floors and form labels come from the adopted rule text and ERCOT's Load Type E and G Question Reference Guides; no megawatt or dollar campus totals are invented.

What the adopted forms language locks

PUCT Project 58481 Item 218 (Order Adopting New 16 TAC §25.194) states that the interconnecting DSP or TSP may accept only these forms of financial security, in parallel language at the intermediate-agreement stage and again at SLLIA:

1. Cash collateral, held in a segregated cash account bearing interest at a rate equal to at least the constant maturity one-month U.S. Treasury bill.
2. Guaranty, only if the guarantor has a U.S. or international credit rating of at least BBB- from Standard & Poor's, Baa3 from Moody's Investor Service, or BBB- from Fitch. If rated by more than one agency, creditworthiness is determined by the second-highest rating.
3. Letter of credit, issued by a major U.S. commercial bank or a U.S. branch office of a major foreign commercial bank, with a U.S. or international credit rating of at least A- from S&P, A3 from Moody's, or A- from Fitch. Multi-agency ratings again use the second-highest rating.

If the customer posts a guaranty or LOC, the utility may require financial records to assess stability. The commission declined to force utilities to accept every listed form when they find insufficient assurance, and it declined to add surety bonds at adoption. Guaranty was expanded beyond a corporation-only parent; a party other than the large load customer may provide it. CIAC for direct interconnection costs remains a separate cash payment, not an alternate FS form.

Three capital bindings the election creates

Read the three forms as capital mechanics, not as a product menu.

Cash binds liquidity. Posting cash moves unrestricted funds into a segregated interest-bearing account at the utility. Not later than 30 days after notice of allocated transmission capacity, the customer must elect in writing whether intermediate cash is returned or credited toward SLLIA financial security. Silence defaults to credit. Cash is the only form that can roll forward without a fresh instrument.

Guaranty binds rating. The floor is BBB- / Baa3 / BBB- (Fitch), measured at the second-highest agency when more than one rates the guarantor. No funds transfer to the utility. At allocation, the interconnecting DSP or TSP must return an intermediate guaranty within 30 days after ERCOT notifies of allocated capacity. The guaranty does not credit into the SLLIA posting.

LOC binds bank capacity and issuer rating. The issuer must be a major U.S. commercial bank or a U.S. branch of a major foreign commercial bank, at A- / A3 / A- (Fitch), again using the second-highest rating when multi-rated. Like a guaranty, an intermediate LOC is returned at allocation rather than credited.

None of that is advice to prefer one form. It is the mechanical difference the rule text creates among the three accepted instruments. An owner who models "post security" as one line item without naming the form is modeling a checkbox the statute and the Verification RFI both refuse.

How Batch Zero Verification asks the same election

ERCOT's Eligibility Verification RFI Question Reference Guides for Load Type E (Planning Guide §9.2.1.1(1)(e)) and Load Type G (§9.2.1.1(1)(g)) open the ILLE Financial Security section with three primary yes/no gates:

• IFS-1 / cash: counterparty (TSP or DSP), amount, date, and proof the utility received access (wire, ACH, deposit receipt, or account statement).
• IFS-3 / guaranty: counterparty, amount, guarantor identity with organizational-chart mark-up, rating-agency selection against the BBB- / Baa3 / BBB- floor, rating evidence, and a complete copy of the guaranty.
• IFS-5 / LOC: counterparty, issuing bank, face amount, posting date, complete LOC copy (term / expiration), amendments or extensions, bank-type classification, and rating evidence against the A- / A3 / A- floor.

A fourth gate (IFS-7 / IFS-8) asks whether security was posted in a form not recognized in the Planning Guide. The guides are reference documents; the RIOO portal RFI controls. Choosing cash, guaranty, or LOC at posting time also chooses which evidence tree the campus must complete inside the Verification window. Adjacent exhibit packaging (ILLE FS exhibit versus TSP ACH versus DSP LOC confirmation rows) is covered in the Batch Zero Verification exhibits article; do not collapse that submitter split into this instrument-election spine.

What this piece does not claim

• It does not restate the §25.194 greater-of dollar test, 20 percent energization return, withdrawal forfeiture, CIAC clocks, Exhibit List submitter split, portal invitation, tariff / hedge exposure, or switchyard drawdown cost-to-complete as the spine.
• It does not invent megawatts, dollar campus totals, bank product names, fee quotes, or client outcomes.
• It is mechanics description, not legal, tax, accounting, treasury, or regulatory advice. Executed utility agreements, bank and guaranty documents, and the live RIOO RFI govern.

Capital checklist before the next instrument election

Before the next intermediate agreement execution, SLLIA posting, or capital release that assumes interconnect security is "handled," put these on one page with a named owner on each line:

1. Form named. Cash, guaranty, or LOC (or a stated mix). Not "posted."
2. Stage named. Intermediate agreement, SLLIA, or both. Cash credit election deadline and default (credit if silent) on the calendar if cash is in play.
3. Return vs credit. Guaranty and LOC returned at allocation; cash can credit forward on election.
4. Rating floor mapped. Guaranty BBB- / Baa3 / BBB- (Fitch); LOC issuer A- / A3 / A- (Fitch); second-highest if multi-rated; evidencing documents identified.
5. Issuer / guarantor eligibility. LOC bank-type classification ready; guaranty entity and relationship documented (org chart mark-up prepared).
6. Verification path staged. Load Type E or G IFS tree for the chosen form: cash confirmation, guaranty package, or LOC package including amendments and term.
7. Utility assurance risk. DSP/TSP need not accept every listed form when assurance is judged insufficient; name who confirms acceptability before execution.
8. CIAC kept separate. Direct interconnection CIAC remains cash-only and is not a substitute FS form.

If line 1 is still "security posted," capital is still treating an instrument election as a checkbox. The adopted forms language and the Verification question trees do not. Owner readiness for the broader §25.194 stack (without collapsing this election spine) is in the Project 58481 Filing 206 Large-Load Owner Readiness Pack linked in Sources.

Related Sitebraid pieces (do not collapse)

• §25.194 capital gate / amounts / return (adjacent): https://sitebraid.dev/blog/puct-adopted-25194-large-load-financial-security-texas/
• Owner readiness pack (resource): https://sitebraid.dev/resources/puct-project-58481-filing-206-large-load-owner-readiness-pack/
• Batch Zero Verification FS exhibits / submitter split (K40): https://sitebraid.dev/blog/ercot-batch-zero-verification-rfi-financial-security-exhibits/
• Switchyard drawdown cost-to-complete (K41): https://sitebraid.dev/blog/texas-data-center-customer-built-switchyard-drawdown-controls/