"We've Got To Close The Loopholes" On REP Contract Pass-Throughs, Texas PUC Commissioner Says

Discussion Arose As PUC Considers Obligation Of REPs To Pass-On Securitization Proceeds To Specific Complainants

October 28, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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During a discussion of the impact of the ERCOT uplift LSE securitization program on specific customer complaints against retail electric providers filed at the Texas PUC, PUC Commissioner Lori Cobos reiterated that, "we've got to close the loopholes," on pass-throughs

Cobos was discussing that some REPs' contracts, in concert with existing PUC rules, did allow pass-through of various charges

Various PUC Commissioners have emphasized the need to address such issues, with PUC Chair Peter Lake saying this summer that fixed products should be, "truly fixed without backdoor exemptions." (story here)

The latest discussion arose as the PUC considered a preliminary order in a complaint case brought by customer BHC Property Management LLC against Engie Resources LLC (Docket 52282)

In brief, the customer complained about high charges in the wake of winter storm Uri, due to ancillary services costs

In a PUC filing, Engie said that the product which BHC Property chose to purchase did not include ancillary services in the contract price. Engie also said in a PUC filing that BHC Property is a large commercial customer and that BHC Property waived certain consumer protection rules.

Commissioner Will McAdams had in a memo requested that the preliminary order include the following question: What effect does the securitization of debt contemplated in Docket No. 52322 have on this matter?

Cobos proposed several more specific questions for the preliminary order, which were adopted (the following questions are paraphrased):

• What effect does the PUC's debt obligation order in Docket 52322 (LSE securitization) have on this case?

• Is Engie Resources receiving securitization proceeds pursuant to such debt obligation order?

• If so, is Engie Resources required to provide a refund or credit to customers for Reliability Deployment Price Adder ("RDPA") charges and Ancillary Service costs above the Commission's system-wide offer cap, and, if so, what is the amount of such refund?

• Has Engie made a payment or financing plan available to the customer related to such charges?

McAdams had said in his memo that, "Looking to the stipulation and settlement agreement from that [the LSE securitization] docket, I see that Engie was a signatory to the agreement and did not choose to opt-out of the securitization process. As such, I want to know why Engie is continuing to pursue this debt while simultaneously seeking relief through securitization."

McAdams noted that the instant case provides a "first opportunity" to address the at-issue contracts and what firm contracts mean

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