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Update 2: Texas PUC Rejects Proposal Requiring REPs To Allow All Residential Customers To Pay Deposits >$50 In Two Installments

Earlier:

Texas PUC Chair: Bill Precludes PUC From Requiring REPs To Allow All Residential Customers To Pay Deposits >$50 In Two Installments

Walker Redline Says Split Deposit Rule Inconsistent With SB1976 As It Requires REPs To Incur Unreimbursed Expenses; Broad Interpretation Would Throw Into Question Other, Current Customer Protections

April 12, 2018

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

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Updated, 4/13, 6am ET:

Regarding approval of the revised proposal for adoption, Commissioner Arthur C. D'Andrea stated during the open meeting that, "Both the Chair and I agree with a lot of the concerns raised by consumer advocates in this case, or at least, share a lot of concerns, but this is a deal that has been hammered out in the legislature, and I don't think we're free to upset it at this point, and everyone was at the table then, and I don't think we can re-litigate that here."

Updated, 4/12, 12pm ET:

The PUC today adopted the revised proposal for adoption reflecting the changes outlined in Walker's memo.

While a written order remains to be issued, it will apparently implicate the issues discussed below regarding applicability of the unreimbursed expenses clause

In any event, the PUC rejected the proposal to require that retail electric providers extend to all residential customers the ability to pay deposits in excess of $50 in two equal installments

The final order also declines extending other customer benefits previously applicable to Lite-Up customers to all residential customers -- such as late fee waivers, required offering of level and average payment plans, and deferred payment plans

The order also deletes current language in the rules requiring deposit installments, late fee waivers, and the offering of level and average payment plans, and deferred payment plans, to Lite-Up customers, given the termination of the Lite-Up program.

Earlier:

In a memo in advance of today's open meeting, concerning a draft proposal for adoption which, as part of removing certain low-income customer benefits from the Substantive Rules due to elimination of the System Benefit Fund, would require that retail electric providers extend to all residential customers the ability to pay deposits in excess of $50 in two equal installments, Public Utility Commission of Texas Chairman DeAnn Walker said that Senate Bill 1976, "preclude[s]," the PUC from adopting such an extension of the deposit benefit to all residential customers.

"After reviewing the comments and reply comments, I have come to the conclusion that the portions of Section 17.007 of the Public Utility Regulatory Act that were adopted in Senate Bill 1976 preclude the Commission from adopting the proposed provisions that would require retail electric providers to allow the payment of deposits over a two month period for all customers," Walker wrote in the memo

"Therefore, I recommend that the Commission delete those provisions that were in the proposed rule," Walker wrote in the memo

As previously reported, Senate Bill 1976, in adopting PURA § 17.007(c), states, "The commission may not require a retail electric provider or a certificated telecommunications utility to offer customer service, discounts, bill payment assistance, targeted bill messaging, or other benefits for which the provider or utility is not reimbursed."

As noted previously by RetailEnergyX.com, while the rest of SB1976 is aimed at low-income customers, the language of the unreimbursed expense provision is not limited, in its text itself, to low-income customer benefits, throwing into question all customer service benefits or protections contained in PUC rule for which REPs are not reimbursed

The interpretation of SB 1976, and how its prohibition on rules requiring REPs to offer unreimbursed customer services or benefits is applied, therefore implicates nearly all Texas customer protection rules, particularly if SB 1976's prohibition on requiring REPs to offer unreimbursed service or benefits is not limited to such benefits required only to low-income customers (as would be the ostensible reading).

Walker's memo did not walk through the statutory construction that led Walker to her conclusion that SB 1976 prohibits the proposed split deposit requirement, which was ostensibly proposed originally by Walker because SB 1976 was clear in that a split deposit requirement targeted to only low-income customers, not all customers, was clearly prohibited by SB 1976.

A redline with Walker's proposed changes to the draft preamble reflecting Walker's position on this issue also does not, in depth, address the statutory construction leading to this conclusion, though Walker's redline notes that REPs would incur costs for allowing deposits to be paid over installments, and therefore would be in conflict with a provision of Senate Bill 1976.

Walker's redlined preamble states, "The commission agrees with ARM that the split deposit provision would be inconsistent with PURA §17.007(c)."

The draft preamble also attributed to ARM the argument that the split deposit provision would be inconsistent with PURA §17.007(c), though it does so in merely reciting and then rejecting ARM's argument, unlike Walker's redline.

However, ARM, in its initial comments on the split deposit proposal, which was first raised in the proposal for publication, did not appear to argue that §17.007(c) prohibits the split deposit proposal due to §17.007(c)'s unreimbursed expenses clause

Rather, ARM, while discussing the costs that REPs would incur due to the split deposit requirement, urged rejection of the split deposit requirement on policy grounds, and Commission precedent.

ARM did broadly recite in its comments that PURA § 17.007(c) states the Commission may not require a REP to offer customer service, discounts, bill payment assistance, targeted bill messaging, or other benefits for which the REP is not reimbursed. ARM also noted that, in a letter filed with the Commission in the rulemaking, Representative Chris D. Paddie, who served as the House sponsor of SB 1976, said that the bill prohibits the Commission from requiring a REP, "to take on unreimbursed costs created by special rule in PURA § 17.007(c)."

However, we stress that ARM made these observations generally, and did not tie them specifically to its opposition to the split deposit requirement. It is unclear, to us at least, from ARM's comments how ARM interprets the applicability of the unreimbursed expenses clause of SB 1976

However, we would note in passing that, in its reply comments, ARM stated, "While SB 1976 addresses whether the Commission can require a REP to offer any unreimbursed programs or benefits to low-income customers effective September 1, 2017..." [emphasis added]

Such language suggests that ARM believes SB 1976 only prohibits the PUC from adopting rules requiring REPs to extend benefits, that are not reimbursed, to low-income customers, and not customers generally. Accordingly, as we interpret this language from ARM, ARM ostensibly would not believe that the PUC lacks authority to impose a split deposit requirement on all customers. Accordingly, the attribution to ARM in the preamble that SB 1976 prohibits the PUC from adopting a split deposit requirement for all customers would apparently be erroneous.

Other than broadly reciting the unreimbursed expenses clause, nowhere in its comments did ARM specifically state that it believes that the Commission lacks jurisdiction to require split deposits for all customers due to SB 1976.

For that matter, TEAM also did not argue in its initial comments that the PUC lacked jurisdiction to adopt the split deposit requirement due to the unreimbursed expenses clause in Senate Bill 1976. TEAM did argue that the proposed split deposit rule is inconsistent with another section of PURA, §17.008(h), which TEAM asserted recognizes a REP's authority to require a deposit as a condition of receiving service

Walker's redlined changes to the preamble in the memo continue, "While it is unclear the amount of the costs to the REPs as a result of the commission adopting the proposed rule to split the deposit for all customers, it is clear that there would be costs that would not be reimbursed, which would be contrary to the new provisions in Senate Bill 1976. Therefore, the commission has removed the requirement for REPs to provide a two month deposit option to all customers."

We stress again that the proposed split deposit requirement would extend the benefit to all customers, not just low-income customers.

To the extent the Commission adopted such an interpretation of Senate Bill 1976 (that a rule cannot impose on REPs any costs from a customer service/benefit that are not reimbursed, not only benefits for low-income customers), every, "customer service, discounts, bill payment assistance, targeted bill messaging, or other benefits," currently required by PUC rule, for which REPs are not reimbursed, would have to be terminated for lack of statutory authority to require such a benefit.

Indeed, if the Commission lacks authority to require split deposits due to the unreimbursed expense clause, the Commission's authority to impose the current limit on deposits (1/5 of annual billings, or two months of billings) is also untenable, as such a limit on deposits requires REPs to incur expenses which are not reimbursed.

Similarly, PUC requirements that limit a due date for a REP bill to no sooner than 16 days after issuance, and which limit late fees to a one-time 5% charge, require REPs to incur expenses (working capital, financing, etc.) which are not reimbursed, and would be contrary to SB 1976 under the interpretation offered in Walker's memo.

Certain disconnection protections not enumerated in PURA, such as those for critical care customers, would also apparently run afoul of the broad interpretation of SB 1976 offered in Walker's memo, as REPs incur expenses to serve such customers when not disconnected for non-pay.

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