Texas PUC Concerned About Retail Provider Lockbox "Guarantees" That Don't Shield Market From Losses; Will Review

Discussing a case imposing a penalty on a retail electric provider which defaulted on TDU payment obligations, Texas PUC Chairman DeAnn Walker expressed concerns with "lockbox" type arrangements under which the guarantor can assume the right to receive a REP's receivables, and use such receivables to settle the REP's obligations to the lockbox provider, rather than obligations the REP has to the market, such as to the TDU

In the instant case, involving TruSmart, TruSmart alleged its default to the TDUs resulted from its lockbox provider electing to keep the receivables, rather than using them to pay TDU obligations

Commissioners agreed to put this item on a list of issues to review, and whether stricter REP financial certification rules are needed to ensure the market is protected as intended

Walker said that it is not acceptable that TDUs are not paid

More details will follow in tomorrow's EnergyChoiceMatters