Texas PUC Approves Stipulation Under Which Utility Parent Will Sell Texas Retail Provider (Without Brand Name), Or Wind Down REP, As Part Of Settlement To Acquire Texas Utility

The Texas PUC today approved a unanimous stipulation that authorizes, subject to various conditions, the merger of the parent of Texas-New Mexico Power and Avangrid

As first reported by EnergyChoiceMatters.com, the adopted stipulation provides that, "Within six (6) months of the closing of this Proposed Transaction, neither Iberdrola nor Avangrid will own or control any customer facing competitive affiliates in ERCOT including retail electric providers, brokers or aggregators."

Currently, Iberdrola, the ultimate parent of Avangrid, also owns retail electric provider Iberdrola Texas

The adopted settlement provides that, "Within six (6) months of the closing of this Proposed Transaction, Iberdrola Solutions LLC dba Iberdrola Texas will either file an application with the PUC to voluntarily relinquish its retail electric provider certificate or transfer its certificate to an unaffiliated third party."

Notably, the stipulation provides that, "Iberdrola Solutions LLC dba Iberdrola Texas will not convey the name, logo or other brand identifying feature such as color scheme or font style to any third party."

"If ever Iberdrola or Avangrid were to seek to own or control any customer facing competitive affiliates in ERCOT including retail electric providers, brokers or aggregators, they would need prior Commission approval and would agree not to have any such competitive affiliates engaged in such activities within TNMP’s service territory," the settlement provides

The stipulation also includes the following provisions of note to the retail market:

• Separate Name and Logo – TNMP will maintain an identity, name, and logo that is separate and distinct from the identity, name, and logos of Avangrid, Iberdrola, and any current and future retail electric providers, wholesale generation companies, and other Texas competitive affiliates of TNMP. To remain separate and distinct, TNMP’s logo will not include the name, logo, or any other brand-identifying features of any Avangrid or Iberdrola retail electric providers, wholesale generation companies, or any other current or future Texas competitive affiliate of TNMP. Notwithstanding the foregoing, the Avangrid name and logo can be added to the TNMP name and logo for branding purposes (e.g., "An Avangrid Company") provided that no current or future competitive affiliate with operations in Texas adds the Avangrid name, logo, or other brand-identifying features for branding purposes. No Avangrid or Iberdrola retail electric providers, wholesale generation companies that operate in Texas, or any other current or future Texas competitive affiliate of TNMP will use the same name, trademark, brand, logo, or any other brand-identifying features such as color scheme or font style as are used by TNMP. TNMP will not otherwise engage in joint marketing, advertising, or promotional activities with any Avangrid or Iberdrola retail electric provider, broker, aggregator, wholesale generation company that operates in Texas, or any other current or future Texas competitive affiliate of TNMP, in a manner that is inconsistent with the Public Utility Regulatory Act and the Commission's rules.

• Code of Conduct – TNMP will file with the Commission for authority to amend and update its code of conduct to incorporate all applicable conditions and limitations on affiliate transactions required by these regulatory commitments.

• TNMP Competitive Affiliate Commitment – TNMP will comply with all requirements in PURA and Commission rules governing all aspects of any relationship and dealings between TNMP and all competitive affiliates.

• No Recovery of Affiliate REP Bad Debt – To the extent that any retail electric provider is affiliated with TNMP, TNMP will not seek to recover from its customers any costs incurred as a result of a bankruptcy of any such affiliate.

The stipulation also provides for a rate credit, under which TNMP will provide a direct financial benefit to TNMP wholesale and retail customers in the form of a $16.2 million rate credit to electric delivery rates payable over three years following closing of the Transaction.

All customer classes will receive the retail rate credit on a kWh basis using an existing SAC04 code in the standard electronic transaction for each ESIID.

The stipulation provides that, "This credit to retail customers shall be implemented by retail electric providers (REPs) in accordance with the customer’s terms of service, and TNMP commits to working in good faith with affected REPs to determine an acceptable method for implementation of such electric delivery rate credits to implement this commitment."

The effective date of the retail rate credit shall coincide with the effective date of the next adjustment to TNMP’s TCRF after the closing of the Transaction.

Docket 51547