Texas PUC Approves Settlement Regarding REP's Certificate Revocation, As CEO Reiterates Concerns About "Re-monopolization" Of Retail Market Due To Retail Acquisitions By, & Market Share Of, Former Incumbents

July 1, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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The Texas PUC adopted without modification a settlement among Energy Monger, LLC, PUC Staff, ERCOT, and OPUC concerning Staff's petition to revoke the REP certificate of Energy Monger

Under the settlement, the parties agree that Energy Monger's REP certificate number 10276 will be revoked by the Commission for Energy Monger's violations described in the settlement, which included a default at ERCOT following the winter weather event

Under the settlement, PUC Staff will not seek any administrative penalties from Energy Monger for the violations addressed in the proceeding.

The settlement noted that, as previously reported, "On March 11, 2021, Energy Monger sold its customer book to JP Energy Resources LLC dba Ampra Energy (Ampra Energy). Between March 15 and March 17, 2021, all Energy Monger customers were transferred to Ampra Energy."

See more details concerning the settlement in our prior story here, including a statement from Energy Monger concerning the settlement

During today's open meeting, Drew Gormley, CEO of Energy Monger, provided comments reiterating several previously stated concerns about the ERCOT and Texas retail markets, including the large market share of two retail providers which formerly served as affiliated REPs and which own a significant amount of formerly incumbent generating assets. Gormley previously made similar comments shortly after the winter weather event, as noted in our prior story here

In March, Gormley had noted that the owners of formerly incumbent generation fleets were investing in acquiring other retail electric providers, rather than building new generation

"Instead of building new generation, they have spent the last decade spending billions of dollars purchasing independent REPs and re-monopolizing the ERCOT retail market. Today there are two companies that control an estimated 80% of the competitive market. ERCOT needs more generation, and if generators will not reinvest in what they should be focused on - Texas will continue to struggle. Generators have a 20% market cap on the generation market share in ERCOT but no market cap on the retail electric market," Gormley had said in March

During today's open meeting, Gormley said that he estimates that $5 billion has been spent by generators to build their REP books. Gormley said that such a huge market share held by former incumbents results in the loss of the true purpose of deregulation

During the open meeting, Gormley also more broadly spoke about ERCOT pricing, the ability of REPs with large market shares to weather such events due to their retail pricing power, prior scarcity events and instances of generator unavailability, and the creation and development of Energy Monger, which was a start-up which had just entered the market and was serving about 4,000 customers, and its proactive hedging. Gormley also cautioned that he believes that the "problem" facing the ERCOT market won't be fixed unless new dispatchable generation is built

Commissioner Will McAdams said that Gormley's public comments during today's meeting were, "well taken," and that the comments, "highlighted one of the foundational questions that we have before us in the near term -- how is our market functioning?"

McAdams noted that the Commission is continuing to examine how the ERCOT market is working, and whether the right incentives are in place to invest in the resources that the public demands for an essential service, including through a series of work sessions being held by the PUC, another of which was held today on a variety of topics including wholesale market design and ancillary services

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