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Texas PUC ALJ Unsure That Retail Provider May Cease Being Non-Volunteer POLR In Middle Of Designated Two-Year Term, Except In Limited Circumstances, Seeks Briefing

October 2, 2023

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Copyright 2010-23
Reporting by Paul Ring •

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The Texas PUC's Chief ALJ is unsure whether a retail electric provider may cease its prior designation as a Large Service Provider (non-volunteer POLR) during the designated two-year LSP term except under narrow circumstances, which haven't precisely been implicated as of yet.

As previously reported, PUC Staff stated that Staff was updating the Large Service Provider (LSP) list to remove Texpo Power as an LSP, because Texpo no longer meets the eligibility criteria used to designate an LSP at the beginning of a term (which is market share) due to a previously reported book sale. See our prior story here for details.

As a result of removing Texpo, Staff also designated two new LSPs for certain service areas and customer classes -- Freepoint Energy Solutions LLC and Ambit Texas LLC (with TXU designated to serve as an LSP in place of Ambit per TXU's prior filing to assume any such affiliate obligations). See our prior story here for more specifics.

Staff's filing stated that Staff was making the changes to the LSP list described above, rather than seeking a PUC order approving them

The ALJ stated, "The ALJ is uncertain that this matter [the LSP designation] can or should now be reopened to revise the NOA [prior notice of approval of the prior LSP designations]."

The ALJ further said, "This concern is heightened by several facts ... 16 TAC § 25.43(g)(2) specifies that designated POLR providers 'must serve two-year terms.' It is unclear, therefore, whether the designations can be undone within the two-year term."

The ALJ directed that, by October 16, 2023, Commission Staff must, and any other interested person may, file briefing responsive to the issues raised above. The briefing should also address whether the relief Commission Staff seeks might be more appropriately addressed under a new docket number utilizing a process such as is specified in 16 TAC § 25.43(j)(5) or (q).

Both of the cited rule provisions provide for the termination of an LSP's obligation, but each's specifically enumerated circumstances have not been, as of yet, implicated in Staff's update

As further noted below, 16 TAC § 25.43(j)(5) allows an LSP to seek relief from the transfer of "additional" POLR customers under certain circumstances, while (q) relates to the default of an LSP, which has not occurred here, although (q) does allow the PUC to "revoke" an LSP's status, "for other good cause."

In seeking to cease being an LSP, Texpo had said that, despite the book sale, Texpo will remain a licensed retail electricity provider, but that, "Texpo no longer meets the qualification under 16 Texas Administrative Code §25.43(h)(2)(C) to be eligible as an LSP capable of serving as a POLR"

Texpo did not cite any other specific substantive rule under which it was seeking the cessation of its LSP designation

16 TAC § 25.43(j)(5) states, "Upon a request from an LSP and a showing that the LSP will be unable to maintain its financial integrity if additional customers are transferred to it under this section, the commission may relieve an LSP from a transfer of additional customers. The LSP must continue providing continuous service until the commission issues an order relieving it of this responsibility. In the event the requesting LSP is relieved of its responsibility, the commission staff designee will, with 90 days’ notice, designate the next eligible REP, if any, as an LSP, based upon the criteria in this subsection."

16 TAC § 25.43(q) provides as follows:

(q) Termination of POLR service provider status.

(1) The commission may revoke a REP’s POLR status after notice and opportunity for hearing:

(A) If the POLR provider fails to maintain REP certification;

(B) If the POLR provider fails to provide service in a manner consistent with this section;

(C) The POLR provider fails to maintain appropriate financial qualifications; or

(D) For other good cause.

(2) If an LSP defaults or has its status revoked before the end of its term, after a review of the eligibility criteria, the commission staff designee will, as soon as practicable, designate the next eligible REP, if any, as an LSP, based on the criteria in subsection (j) of this section.

(3) At the end of the POLR service term, the outgoing LSP must continue to serve customers who have not selected another REP

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