Texas Retail Electric Provider Seeks To Drop Customers To POLR

May 18, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Trustee for Texas retail electric provider Brilliant Energy (Debtor) has sought bankruptcy court approval to drop its commercial customers (which represent its remaining customer book) to the provider(s) of last resort (POLR)

"The Trustee has determined that there are no qualified or otherwise viable bids for the purchase of the Debtor’s book of commercial customer contracts. This is not the outcome anyone wanted for the commercial customer contracts, but it is reality. The relief sought herein is intended to facilitate an orderly transition of those commercial customer contracts to another retail electric provider or a provider of last resort, so as to limit claims against the Estate and minimize the disruption to those customers caused by the winding up of the Debtor’s business," the Trustee said in a motion

No qualified bids (and no asset purchase agreements) for the Debtor’s commercial book were submitted by a bid deadline, or have otherwise materialized as of the date of the motion, the Trustee said

"The Trustee seeks, on an emergency basis, entry of an order ... authorizing the Trustee to cause the transition of the Debtor’s commercial retail electric customers to a provider of last resort (a 'POLR') on or before May 28, 2021, which is the date after which the commercial contracts will be deemed rejected pursuant to section 365(d)(1) of the Bankruptcy Code (as extended by prior order of the Court)," the Trustee said in a motion

"If the Court grants the requested relief, the Trustee intends to provide notice to commercial customers and brokers of the approaching rejection and POLR transition date, so as to provide those commercial customers with an opportunity to switch to another retail electric provider prior to a transition to POLR. In connection therewith, the Trustee seeks authority to waive any termination fees that may be applicable to commercial customers that voluntarily switch to another retail electric provider. The Trustee’s post-petition lender has no objection to the relief requested," the Trustee said in a motion

"The Trustee further seeks to facilitate the voluntary transition by commercial customers to third party REPs, prior to any POLR transition date, by waiving termination fees associated with early termination by commercial customers. The Trustee submits that voluntary transitions by customers will serve to reduce potential rejection damages claims against the Estate. The Trustee also questions whether he could effectively collect early termination fees where the estate is effectively sending these customers to a different provider," the Trustee said in a motion

"All or a substantial majority of the Debtor’s commercial customer contracts require the payment of an early termination fee if the customer counterparty terminates its contract with the Debtor prior to the end of the contract term. The Trustee’s professionals have been in communication with many of the brokers that serve commercial customers, and understand that those brokers are ready and able to assist commercial customers with voluntary transitions to other REPs provided that early termination fees are waived. The Trustee further understands that a voluntary switch to another REP can and often does occur in as little as a few days. Accordingly, the Trustee requests Court approval to promptly notify commercial customers and brokers of the anticipated POLR transition date, as well as the waiver of termination fees should those customers switch to a new REP following the date of this Motion and before the POLR transition date," the Trustee said in a motion

"The Debtor’s business will be unable to serve its commercial customers after May 28, 2021. The Trustee has been unable to find a viable purchaser for the commercial customer contracts and the Trustee is not authorized to operate the Debtor’s business over an extended period of time. The TIP Facility, through which the Trustee finances ongoing operations of the Debtor’s business, matures no later than May 28, 2021, and although the Trustee is negotiating with the post-petition lender to extend the term of the TIP Facility into June, the Trustee anticipates that a condition of such extension will be that all customer accounts have been transitioned to another REP or a POLR before the end of May 2021. Further, pursuant to section 365(d)(1) of the Bankruptcy Code (as extended by prior order of the Court), the Debtor’s commercial customer contracts will be deemed rejected following May 28, 2021," the Trustee said in a motion

The Trustee's proposed order would provide that, "The Debtor’s agreements with DTE Energy Trading, Inc. for the purchase of wholesale energy shall be deemed terminated upon the transition of all of the Debtor’s customers to another retail electric provider or a POLR. The Trustee is authorized to enter into any agreements with DTE Energy Trading, Inc. necessary or desirable to further evidence such termination."

The sought POLR drop does not impact Brilliant's residential customer book, which, as previously reported by EnergyChoiceMatters.com, was purchased by Evolve Retail Energy LLC d/b/a Octopus Energy US

The sale of the residential customer contracts is expected to close with residential contracts transferred and transitioned to the purchaser between May 24, 2021 and May 28, 2021

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