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Texas Draft Preamble on Cease & Desist Authority Provides Guidance on When Authority May Be Applied to Retail Electric Providers
Staff of the Public Utility Commission of Texas have filed a draft proposal for adoption to implement the Commission's cease and desist authority, which includes in the preamble a discussion of the circumstances under which the authority may be applied with respect to retail electric providers.
The draft proposal for adoption would, consistent with recent statute, provide that the commission or an authorized executive director may issue a cease and desist order if the Commission or executive director determines that the conduct of a market participant meets one or more of the following conditions:
(1) The conduct poses a threat to continuous and adequate electric service;
(2) The conduct is hazardous;
(3) The conduct creates an immediate danger to the public safety; or
(4) The conduct is causing or can be reasonably expected to cause an immediate injury to a customer of electric services and that the injury is incapable of being repaired or rectified by monetary compensation.
In discussing the circumstances under which a cease and desist order may be issued, Staff's proposed preamble notes that, "The commission agrees that the hypothetical situations in which a REP is comingling funds and going out of business or has an expiring letter of credit would not in isolation meet the requirements for the commission to issue a cease and desist order against the REP because the harm from the REP's actions would be reparable with monetary compensation."
In contrast, the draft preamble notes that a cease and desist order may be appropriate in the retail electric market where a REP attempts to circumvent the extreme weather disconnect rules, during an extreme weather event, by coding customers as "move outs" rather than disconnects. Additionally, the draft concludes that a cease and desist order may be appropriate in cases where a REP is selling retail electric products to end-use customers without a REP certificate.
While the draft preamble notes the similarities between the cease and desist authority's condition of "threat to continuous and adequate electric service" and the NERC and ERCOT "adequacy standards," the draft disagrees with the REP Coalition that this condition would not generally apply to a REP's conduct in relation to customers.
The proposal for adoption would not condition issuance of a cease and desist order on the identification of a statutory or rules violation in the order.
"The commission disagrees that a cease and desist order must identify a violation of a statute or rule," the draft preamble states. "The statute authorizing the commission to issue a cease and desist order does not require a finding of a violation of PURA or commission rules, in contrast to the explicit requirements to find a violation set out in the statutes governing TDI's [Dept. of Insurance] cease and desist authority and the commission's administrative penalty authority cited by the REP Coalition in its comments. In PURA § 15.104, the crux of the inquiry into whether the commission is authorized to issue a cease and desist order centers on the specific type of harm resulting from the conduct of a market participant. The intent of a cease and desist order is to provide the commission with a means to quickly prevent or mitigate a market participant's hazardous conduct. Requiring the commission to make a finding of the elements of an underlying violation in addition to proving the conduct requirements in the statute will cause unnecessary delay in the adjudication of the cease and desist order."
Project 41659
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February 17, 2014
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Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
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