PUCT Staff Says Commission Intended to Prohibit Political Subdivisions from Obtaining REP Certificates

The PUCT, in SUBST. R. 25.107, "intended to prohibit a political subdivision from obtaining certification as a REP, and the rule should be interpreted accordingly," Staff said in opposing a rehearing request by the City of Dallas concerning the Commission's denial of the City's REP application (38630).

SUBST. R. 25.107 states that it, "applies to all persons who provide or seek to provide electric service to retail customers in an area in which customer choice is in effect and to retail customers participating in a customer choice pilot project authorized by the commission. This section does not apply to the state, political subdivisions of the state, electric cooperatives or municipal corporations, or to electric utilities providing service in an area where customer choice is not in effect..."

SUBST. R. 25.107(b)(10) expressly excludes a municipal corporation from the definition of person, Staff noted. The City has argued that it meets the definition of a "person" under PURA.

Staff responded that, "PURA § 17.051(a) required the Commission to adopt rules relating to the certification of REPs. The Commission has no other rules for the certification of entities as REPs. Thus, the Commission intended that P.U.C. SUBST. R. 25.107 address all possibilities for certification as a REP. Furthermore, it would have been incongruous for the Commission to establish detailed REP certification standards for certain types of entities and none for other types of entities."

"In contrast to P.U.C. SUBST. R. 25.107's exclusion of political subdivisions from certification as REPs, P.U.C. SUBST. R. 25.111 addresses the registration of aggregators and allows, with limitations, both persons and political subdivisions to be registered as aggregators. Thus, in P.U.C. SUBST. R. 25.107, the Commission intended to prohibit a political subdivision from obtaining certification as a REP, and the rule should be interpreted accordingly. Furthermore, P.U.C. SUBST. R. 25.107 is a competition rule and, pursuant to PURA § 39.101(f), its validity is no longer subject challenge," Staff said.

"The Commission must comply with its own rules. Thus, Dallas's arguments that PURA requires certification of REPs are beyond the scope of this docket. If the Commission wants to revisit its interpretation of PURA, embodied in P.U.C. SUBST. R. 25.107, that municipal corporations and other political subdivision cannot be certified as REPs, it should do so in a rulemaking proceeding. Not only would a rulemaking proceeding be the legally proper means of reconsidering the issue, it would have the practical benefit of providing notice and opportunity for comment by all interested entities," Staff added.

"Broad input on such an issue would be valuable because the certification of municipal corporations and possibly other political subdivisions could have major impacts on the Texas retail competitive market. Private entities that are currently certified as REPs would undoubtedly want to be heard on this issue," Staff noted.