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Texas Consumer Advocates Raise Concern Strawman POLR Rule Could Raise Rates Texas Legal Services Center and Texas Ratepayers' Organization to Save Energy have raised concern regarding a Texas strawman rule to revise the Provider of Last Resort mechanism to allow a non-volunteer POLR (LSP) to delegate its LSP obligations to a REP-certificated affiliate of the LSP.
See prior story for background on the strawman rule
TLSC and Texas ROSE noted that current Rule 25.43 requires LSPs to move transitioned residential and small business POLR customers from the POLR-formula rate to a market-based month-to-month product after 60 days.
TLSC and Texas ROSE said that a market-based product is essentially defined under the current rule as one that is not the POLR rate (more specifically, one that does not apply a multiplier to the inputs of the LSP rate components).
"TLSC and Texas ROSE assume a market-based product is one that the LSP offers its non-POLR retail customers."
TLSC and Texas ROSE raised concern that an LSP could create an affiliate for the sole purpose of serving POLR customers, and which is therefore not offering standard market-based rates to other customers, in order to avoid offering the original LSP's otherwise available market-based rate to mass transitioned customers.
"[T]he proposed amendment raises a concern that the affiliate REP's market-based product(s) will be priced higher than the market-based products provided by the LSP," TLSC and Texas ROSE said.
"We recommend that any amendments to the POLR rule should include a definition of market-based product that describes what it is and not just what it isn't," TLSC and Texas ROSE said.
"Any delegation of POLR responsibilities should be accompanied with requirements that the market-based product relied upon by the affiliate REP is priced no higher -- including fees and/or charges -- than the market-based products offered by the LSP," TLSC and Texas ROSE said.
Several Cities with original jurisdiction also raised concern about the impact of bankruptcy proceedings on the LSP and any affiliate designated by the LSP to assume the LSP's POLR obligations. The Cities suggested modifying the rule to require that any request for delegation of POLR authority shall include a commitment from the LSP to shield the affiliate from any bankruptcy proceeding involving the LSP or other affiliates of the LSP. The review of the request, by the Staff or through a contested case, may include an evaluation of the LSP's ability to protect the affiliate from a bankruptcy proceeding, Cities recommended.
Retail electric providers suggested that the Commission, "could build upon the solid foundation created by the Strawman Rule," to explore the possibility of expanding the ability of an LSP to assign its POLR obligation to a non-affiliated entity.
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May 17, 2013
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Reporting by Karen Abbott • kabbott@energychoicematters.com
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