The Public Utility Commission of Texas has stated in their latest filing that they believe the requirements of a retail electric provider certificate holder are well known and should have been known by Clearview Electric. The commission does not believe a waiver should be given to Clearview Electric in order to allow them to comply with the requirements of being an REP in Texas unless specific circumstances warrant it.
The PUCT has asked that Clearview give them at least 90 days notice prior to the expiration of their suspension period on whether they plan to come into compliance with the PUCT rule P.U.C. Subst R.25.107 by the compliance deadline. So what is this rule all about and how does it relate to the Texas electricity consumer? Below is a summary of the rule that the PUCT is trying to get Clearview Electric to be in compliance with.
The amendment to §25.107 (1) provides requirements for a change in control of a REP, (2) strengthens the reporting and certification requirements related to managerial resources and ability, (3) limits the number of business names (dbas) a REP may operate under, (4) provides requirements for certification as a distributed generation REP serving large commercial customers, (5) allows the commission to draw on a letter of credit upon the revocation of a REP certificate, (6) defines erroneous switch-holds related to deferred payments plans as a significant violation of the commission’s rules, and (7) makes other clarifying changes.
As you can see the rule seems to be related to making it transparent who owns an electric company as well as limiting the amount of names one REP can hold. I would imagine these rules are in place so that an electric provider cannot hide behind many names for the sole purpose of gaming the system and advertising and promoting to customers in a way that could be seen as unethical and bad for the retail electric markets. We are not saying that Clearview Electric has done any of these things as it appears their violation has more to do with the letter of credit rule. The PUCT may not believe this provider will do anything bad but by enforcing these rules they protect the electric consumer from the possibility of something bad happening.
Currently this company is suspended from selling electric service in Texas. I went on their website and they no longer have Texas listed as one of the states they sell electric service in. From what I can find online they only have about 30 electric service customers in Texas. The PUCT wants a $30,000 letter of credit from them to protect the investment in energy of these current customers but will eventually need a $500,000 letter of credit for them to fully comply. Some of the things the PUCT would like Clearview to agree with in writing to avoid revocation of their REP certificate in Texas are listed below:
- They must agree to revocation if they fail to comply with rule P.U.C. Subst R.25.107 by the deadline date.
- Must agree to revocation if they significantly violate any additional rules of P.U.C. Subst R.25.107 before the deadline date of compliance.
- Clearview must agree that its $30,000 standby letter of credit cannot be withdrawn until they file a $500,000 letter of credit to comply with P.U.C. Subst R.25.107(f)(4)(F)
- Clearview must agree that once revoked or through Clearviews voluntary ceasing of service to Texas customers it must pay their $30,000 letter of credit to the Public Utility Commission of Texas.
- They must agree to not add any new Texas customers until the conditions of P.U.C. Subst R.25.107 are met.
- Clearview must agree to give 90 days advanced notice advance of the June 30 2012 deadline if they will be ceasing operations in Texas or providing the letter of credit.
The PUCT believes that if Clearview Electric cannot agree to these requests that the commission should consider revoking the REP’s certificate.
I looked at the information the PUCT had on Clearview Electric and they do not list any DBA’s this company uses or any bizarre change of ownership information. My opinion is that this electric company may have just not had the required $500,000 letter of credit the PUCT requires for them to operate as a retail electric provider in Texas.
If this is the case it makes sense for the PUCT to be heavy handed in this regard because many electric providers have gone out of business and did not have the money to cover the investment in the energy they purchased when the market moved against them.
The $500,000 letter of credit helps protect customers, investors, and the tax payers from a provider buying energy and then never paying the ERCOT electric grid back for that purchased power.