PUCT Schedules Workshop on Interaction of POLR Rate, Prepaid Service

The PUCT has scheduled for February 16 a workshop regarding amending Commission substantive rules relating to electric Providers of Last Resort (POLR), including the calculation of the POLR rate and application of the POLR rate to prepaid service (Project 39969).

As first reported by Matters (12/7), two state representatives have asked the Commission to examine the current price cap on residential prepaid service, equal to the maximum POLR rate, stating that the cap does not allow REPs to cover the costs of forward-purchased power in situations where wholesale prices, on which the POLR rate is based, decline versus the prices at which REPs hedged.

Prior to the workshop, the Commission requested that interested persons file comments on the following questions:

1. P.U.C. SUBST. R. 25.43 lists the requirements for POLR eligibility and explains how the rate for POLR service is to be calculated. Now that ERCOT has moved from a zonal to a nodal market, what amendments, if any, should be made to this rule to clarify how the POLR rate should be calculated? Please discuss the potential impact of these amendments on customers and market participants.

2. P.U.C. SUBST. R. 25.43(c)(l0) defines the POLR area of AEP Texas Central Company to include the area served by Sharyland Utilities, L.P. (Sharyland). Should the commission revise this definition so that the area served by Sharyland would be a separate POLR area? If so, what should the POLR area be named to distinguish the existing competitive market area of Sharyland from the new Sharyland divisions that are being moved to ERCOT and possibly opened for competition?

3. P.U.C. SUBST. R. 25.478(a)(5) implements Public Utility Regulatory Act (PURA) §39 .1 07(g), which prohibits metered electric service sold to residential customers on a prepaid basis from being sold at a price that is higher than the price being charged by the POLR provider. Should the rule be amended to clarify how to apply a POLR rate, which is calculated based upon actual market prices, to prepaid service? In responding to this question, please comment on the following options:

a. requiring that the rate for prepaid service be no higher than the previous month's average POLR rate;

b. requiring that the rate for prepaid service be trued-up to the difference between the applied prepaid rate and the actual POLR rate;

c. requiring that the rate for prepaid service be no higher than a pre-determined fixed POLR rate;

d. requiring that the rate for prepaid service be no higher than the rolling average of the previous 30 days POLR rate; and

e. any other options that interested parties might want the Commission to consider.

4. Should rule language in P.U.C. SUBST. R. 25.478(a)(5) be moved to P.U.C. SUBST. R. 25.498? If so, please discuss any further clarifications that may be needed, other than those identified in response to Question 3. If not, why?