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Texas Retail Providers Propose TDUs Assume "Financial Responsibility" For Critical Care Customers For Whom TDU Repeatedly Denies Valid Disconnect For Non-pay Requests

January 2, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

In comments on a period review of the electric substantive rules applicable to the Texas retail market, the Retail Electric Provider Coalition said that to the extent TDUs repeatedly refuse to perform valid disconnect requests for critical care customers, then the TDU should be required to assume financial responsibility for the customer.

The REP Coalition noted that § 25.497 provides details on how to qualify for critical care programs. "While the rule is obviously sensitive to the welfare of these customers, it specifically says in section (f) that designation as a critical care or chronic care customer does not relieve a customer of the obligation to pay the REP for services provided, and a customer's service may be disconnected pursuant to §25.483 of this title," the REPs noted

"However, TDUs have generally made the decision to reject disconnection requests from REPs for these customers. This has resulted in significant outstanding balances for some eligible customers, balances that are ultimately borne by the REP and its other customers," the REPs noted

"While continuing service regardless of payment is important, placing the burden of unpaid balances totally on the REP should not be the policy of this state. A REP has limited recourse when a TDU refuses to disconnect. One option is to request they cease assessing TDU charges; however, this does not stop the charges to the REP for wholesale power cost and ERCOT fees. Unlike a regulated TDU that can request recovery of these charges during a rate case, competitive REPs are left without recourse," the REPs noted

"The REP Coalition notes that disconnection of critical care customers is allowed in non-competitive areas of the state. The City of Austin reported in May 2017 there were 22 customers on its Medically Vulnerable program subject to disconnection with outstanding balances exceeding an average of $4,500," the REPs noted

"The REP Coalition is sensitive to the well-being of customers and will support all efforts to accommodate and continue providing service to critical care or chronic condition residential customers. However, § 25.483 should be revised to the extent it does not require a TDU to honor a disconnect request after proper notice has been provided by the REP and the safety of the customer has been certified. If TDUs repeatedly reject a valid disconnection request for such a customer, the REP Coalition recommends amending § 25.483 such that the TDU assumes financial responsibility for the customer," the REPs said

The REP Coalition also sought changes to § 25.479(h), which prohibits the transfer of a customer's balance between REPs (including REPs affiliated with each other), other than transfer of a deposit as specified in § 25.478(j)(2).

The REPs noted that, in the order adopting § 25.479 in 2000, the preamble addressed the intent of the rule provision regarding balance transfers: "The commission adjusts the rule to specifically disallow balance transfers between REPs, since this places a collections obligation on the new REP."

"This rationale in support of this blanket prohibition against balance transfers between REPs would not apply, however, in the context of REPs related by common ownership or common corporate control that elect to adopt policies that allow for balance transfers. A complete prohibition of the transfer of customer balances between affiliated REPs can create an impediment for customers to switch to an alternate product offered by a REP's affiliate, which appears to be an unintended consequence of the rule," the REP Coalition noted

"As the market has evolved, REPs have developed brand strategies to include niche REPs that market specific products. The current language harms customers by potentially limiting their choice of products available to them, even where a better value for them might be available. The rule also acts as an impediment to the potential acquisition of REP's book of customers, especially if the acquiring REP wants to migrate the customers to their existing brand (as is often the case when a REP acquires the customers of a REP that is at risk of defaulting and causing a POLR drop). The elimination of this prohibition would aid REPs in the collection of bad debt, which would generally have a positive impact on the market as a whole, however, any transfers would require consideration of all applicable customer protections in regard to proper notice and affirmative consent," the REPs said

"Accordingly, the REP Coalition recommends that the prohibition against balance transfers in § 25.479(h) apply only in the context of non-affiliated REPs," the REPs said

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