Texas PUC Imposes Higher, $1.75 Million Penalty On Retail Electric Provider

The Texas PUC adopted an order imposing an administrative penalty on TruSmart Energy LLC for what the order said was, "failing to timely remit payment to five transmission and distribution utilities (TDUs) under the terms of its tariff with each."

The PUC's final order rejected the proposed fine of $1.1 million as recommended by an ALJ in a proposal for decision, and instead the PUC in its final order imposed an administrative penalty of $1.75 million. The ALJ's proposed penalty had equaled the amount that TruSmart had failed to pay the TDUs

"The Commission finds the mitigating factors relied on by the SOAH ALJ in recommending the lower penalty amount of $1,135,674.93 unpersuasive. In particular, the Commission rejects the ALJ's contention that because no TruSmart customer lost power, TruSmart should be subject to a lower penalty. Had any TruSmart customer lost power as a result of TruSmart's defaults, TruSmart would have been subject to additional penalties for committing a separate violation," the PUC said in its order

The $1.75 million amount had been recommended by PUC Staff, and the PUC in its order noted that, "Commission Staff also provided testimony explaining that it based its proposed penalty on the factors listed in 16 TAC § 22.246 and the following facts, among others: (1) the large amount of the default to the TDUs; (2) that ratepayers will ultimately bear the burden of repaying the TDUs; and (3) that TruSmart made no efforts to correct the violation and will not repay the TDUs."

"After weighing the factors set out in PURA § 15.023(c) and 16 TAC § 22.246(c)(3), the Commission finds that an administrative penalty of $1,750,000 is appropriate, and that there are no mitigating factors justifying a lower penalty amount," the PUC said in its order

"A significant administrative penalty is required to deter TruSmart, should it ever re-enter the market, and other REPs from defaulting on financial obligations to TDUs," the PUC said in its order

Docket 46093