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Texas PUC Staff Would Seek Comments On Whether Additional Means Of Financial Assurance Should Be Permitted For Retail Provider Certification
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Texas PUC Staff have filed for Commission consideration a draft proposal for publication to modify certain provisions of the retail electric provider certification rules under 16 Texas Administrative Code (TAC) §25.107
Although Staff's proposed changes under the draft address only several discrete issues related to REP certification, Staff does more broadly seek public comment on other provisions related to REP financial requirements
Specifically, Staff proposes to seek comment on whether additional means or methods of financial assurance should be added and made available
to REPs to meet the access to capital requirements under §25.107(f)(1), or the customer deposit
and prepayment requirements under §25.107(f)(2) [with Staff's request for comments listing surety bonds and insurance as potential additional methods on which stakeholder comment is sought]
Staff would also request comments on whether the financial documentation or verification requirements for segregated cash
accounts or escrow accounts under §25.107(f)(4)(D) should be modified, including whether such should be expanded, reduced, clarified, or otherwise changed
Among Staff's proposed changes to the REP certification rules is that Staff notably proposes to change the definition of "affiliate" as used in the REP certification rules
Staff proposes that the term affiliate in §25.107 shall mean, "any company that is related by common control with another
company. Any company in the immediate corporate family or a company in the
direct or indirect chain of corporate ownership up to the ultimate parent company
is an affiliate unless the context indicates otherwise."
An updated REP certification form included as part of the proposed rule changes would note that, "A principal may be an affiliate." The term principal has an expansive definition in the current rule and currently includes, among other criteria, an executive of a company; or a person who exercises control and has apparent or actual authority to exercise such
control over the REP; or a manager, managing member, or a member vested with the management authority
of a limited liability company (with the existing rule, as noted, listing additional criteria which sets forth whether an individual is a principal)
The current REP certification rules refer to a general definition for the term affiliate as located in the general Chapter 25 rules at §25.5, which itself, among more specific provisions included in §25.5, also relies on a PURA definition, and both of which define affiliate in terms of percentage of ownership of, or common control of, a "public utility". For example, the current REP certification rule's definition of affiliate, by referring to Subst. R. §25.5, provides that, in addition to other utility-linked criteria, an affiliate includes a person who directly or indirectly owns or holds at least 5.0% of the voting securities of a public utility, or a corporation that has at least 5.0% of its voting securities owned or controlled, directly or indirectly, by a public utility
Staff said in a memo that the proposed modification to the definition of "affiliate" is designed to more appropriately conform with the disclosure and financial requirements of the REP certification rules in §25.107.
Otherwise, Staff's proposed changes largely relate to modifying the REP certification rule to reflect electronic filing requirements, including electronic filing of letters of credit and amendments to such letters of credit
As proposed, electronic letters of credit must contain a verifiable electronic signature or other means of
authentication set forth in the proposed rule
The electronic letter of credit's verifiable electronic signature would be required to include a signature from an executive officer of the issuing bank with
a digital identifier (e.g. a public-key certificate or self-signed
certificate)
Alternatively, an irrevocable stand-by letter of credit without a verifiable
electronic signature would be required to include other means of authentication which must consist of, at a minimum, an
affidavit attesting to the authenticity of the irrevocable stand-by
letter of credit, with such affidavit required to use the form prescribed by the PUC
The rule changes would include a prohibition on amending an LoC
without Commission approval. The changes would also include authorization for the Commission to present or terminate an LoC by electronic transmission.
The proposed rules would set forth the specific conditions which must be followed in order for a change in an LoC (such as either an increase or decrease in the LoC's stated amount) to become effective, or for a non-renewal of a letter of credit to become effective.
The draft includes a proposed new letter of credit template to be used by REPs, with Staff specifically seeking comment on whether the proposed template should be modified
Staff noted that, under recently adopted changes to the PUC's procedural rules at §22.71(d)(1)(A), which require electronic filings, REPs with an existing physical letter of credit on file must file an original letter of credit
electronically on or before March 5, 2027
The Option 2 REP rules are also proposed to be clarified such that Option 2 REP service is limited to service which provides 1 MW or more of "capacity" to a customer (rather than the current language of 1 MW or more of "energy"), with the customer still required to provide an affidavit agreeing to service with the Option 2 REP
Staff also proposes to strike the following language from the REP certification rule related to the use of segregated cash accounts: "If
the segregated cash account contains customer deposits, the
agreement must specify that the customer deposits are not the
property of the REP or in the REP’s control, unless, if allowed by
the REP’s terms of service, the customer deposits are applied to a
final bill or to satisfy unpaid amounts."
Similarly, Staff proposes to strike the following language from the rule related to the use of escrow accounts: The escrow account, "will not be the
property of the REP or in the REP’s control, unless, if allowed by
the REP’s terms of service, the customer deposits are applied to a
final bill or to satisfy unpaid amounts."
Project 59288
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Staff Proposes New Definition For Affiliate In Revised Retail Provider Certification Rules
March 25, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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