PUCT Directs Staff to Modify AllStar Energy Settlement

The PUCT directed Staff to seek modifications to a settlement with AllStar Energy (organized as TexRep5 LLC) under which Staff would withdraw its petition to revoke AllStar's REP certificate; agree to support an amendment to the current certificate; and subject AllStar to a penalty and compliance program going forward; as the Commission was concerned that the settlement did not provide enough assurance that AllStar would comply with Commission rules.

As only reported in Matters (8/13/10), the settlement would require AllStar to pay $50,000 and institute a compliance program to resolve Staff's motion to revoke AllStar's certificate for allegedly providing misleading statements to the Commission and lacking managerial competency (Docket 37801). The case arose as AllStar sought to correct what it termed an error in a prior REP certificate amendment which erroneously listed Horizon Power & Light as AllStar's owner, rather than the George Corporation. Staff alleged that AllStar, in the application, violated several Commission rules governing retail electric providers by failing to disclose an investigation by the Delaware PSC into Horizon Power & Light, which shares principals with AllStar but is not affiliated with AllStar (Only in Matters, 1/1/10).

The Commission agreed with several additional requirements suggested by Commissioner Kenneth Anderson, who criticized what he termed a "cavalier attitude" towards compliance exhibited by AllStar. Under Anderson's recommendations, the Commission directed Staff to seek to add the following provisions to the settlement:

• Require AllStar to affirm that the compliance officer required under the settlement will have an independent obligation to report any violations to the PUCT
• Require more frequent (monthly or quarterly) compliance reports, versus every four months in the current settlement
• Require the compliance reporting and requirement for a compliance offer to extend until removed by the Commission, instead of imposing a two-year sunset on the conditions, with the provision that AllStar may petition the Commission to lift the requirements after two years
• Explicitly state that failure to comply with conditions of the settlement is grounds for immediate revocation of the REP certificate

Though agreeing that Anderson's recommended changes may make the settlement more palatable, Chairman Barry Smitherman was "troubled" by the settlement and permitting continued certification, stating that the intent of the certification rules (and specifically the disclosure of company/principals history) is to prevent someone with a history of bad behavior from getting a license in Texas. Due to the technicality that AllStar and Horizon are not affiliated, and that the Delaware PSC's action was taken against Horizon and not its principals, Staff said that there was enough of a question as to what disclosures were required of AllStar under the rules' current language to warrant settlement as opposed to a contested case, though Staff believed that it would prevail on the merits under a contested case scenario.