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Under Broad SB1976 Reading, Texas PUC Can’t Prohibit REPs From Disconnecting Non-Pay Customers, Ever

September 26,2017



Organizations representing Texas retail electric providers filed comments concerning a strawman proposal filed by PUCT Staff which would eliminate several customer protections currently in the substantive rules for customers who were eligible for the prior Lite-Up Texas discount program (funded by the defunct System Benefit Fund)

In brief, the strawman (Project 47343) would end the requirement for REPs to offer deferred/level payment plans, deposit installments, and waived late fees to low-income customers eligible for the defunct Lite-Up program (see details here)

Consumer advocates oppose the strawman's proposals, arguing that the termination of the SBF does not mandate the end of the consumer protections listed above, which the consumer advocates say are unrelated to the SBF

Groups representing REPs generally favored the strawman, but, more notably, seized on certain language in SB 1976, which is a bill authorizing the PUCT to create a list of low-income customers if REPs voluntarily fund such list, as prohibiting certain actions under consideration in the proceeding

Specifically, the strawman asks if the PUCT should require REPs to issue bill messages concerning any bill assistance programs, discounts, or other benefits the REP may offer. The strawman further asks if REPs should be required to file reports on any voluntary low-income assistance programs that the REP may elect to offer

The Alliance for Retail Markets (the members of ARM participating in Project 47343 are: Ambit Energy, L.P. d/b/a Ambit Energy; Champion Energy Services, LLC; Constellation NewEnergy, Inc.; Direct Energy, LP; NRG Retail Companies; and TXU Energy Retail Company, LLC) and Texas Energy Association for Marketers, in separately filed comments, both opposed any requirement for such bill messaging, citing language in SB 1976 which states, "The commission may not require a retail electric provider or a certificated telecommunications utility to offer customer service, discounts, bill payment assistance, targeted bill messaging, or other benefits for which the provider or utility is not reimbursed."

Such provision is codified at PURA § 17.007(c)

PURA § 17.007 is styled "Identification Process For Customer Service Benefits".

ARM and TEAM both said that PURA § 17.007(c) prohibits the PUCT from requiring bill messaging concerning low-income programs to the extent there is no reimbursement for such costs of bill messaging. The term "targeted bill messaging" does appear in PURA § 17.007(c)

However, TEAM goes further, stating in its comments that PURA § 17.007(c) also prohibits the PUCT from requiring REPs to report to the Commission concerning any voluntary low-income programs, since such reporting would result in administrative and compliance costs to the REP which are not reimbursed.

"[N]o REP should be required to report to the Commission on its voluntary low-income-customer programs and benefits. PURA § 17.007(c) precludes the Commission from imposing requirements on REPs with regard to low-income customer programs or other benefits for which the REP is not reimbursed," TEAM said in its comments

However, the plain language of PURA § 17.007(c) would appear to allow the PUCT to require such reports, and only a broad reading of "other benefits" would create such a prohibition.

PURA § 17.007(c) does not prohibit the PUCT from imposing any unreimbursed costs on REPs -- only those costs relating to the mandatory "offer" of one of several enumerated or other "benefits."

Specifically, PURA § 17.007(c) prevents the PUCT from requiring a retail electric provider, "to offer customer service, discounts, bill payment assistance, targeted bill messaging, or other benefits for which the provider or utility is not reimbursed."

A report to the PUCT on the REP's activities does not plausibly fall under any of those categories, including, "other benefits." Moreover, a report to the PUCT is not a requirement for the REP to, "offer", anything.

However, TEAM's attempt to read a prohibition on a reporting requirement into PURA § 17.007(c) raises an interesting issue. Taken at its broadest level, PURA § 17.007(c)'s provision prohibiting any mandate for REPs to offer unreimbursed, "customer service ... or other benefits," could be used to nullify nearly all of the current customer protection rules

Absurd, you say. Clearly, you argue, statutory construction would limit PURA § 17.007(c) to that section of PURA, § 17.007, and wouldn't contaminate other sections. But, as noted above, PURA § 17.007 is only styled "Identification Process For Customer Service Benefits". While subsection (a) of PURA § 17.007 does specifically discuss identification of low-income customers, nothing explicitly in PURA § 17.007 limits the application of the section to low-income customers or related issues. (Indeed, looking at the history of the bill, the language regarding the prohibition on unreimbursed mandates was originally a subsection underneath the voluntary low-income provision, clearly limiting its application. However, in the final version, the unreimbursed mandates language became its own letter (c) and stood apart as any other subsection)

The potential for an expansive nature of PURA § 17.007(c) is not a ridiculous question. Indeed, ARM, in its comments, saw fit to stress that 16 T.A.C. 25.480(g)(2)(A), which requires a REP to implement a bill payment assistance program for residential electric customers that is funded, at a minimum, by voluntary customer donations solicited through retail electric bills, does not run afoul of PURA § 17.007(c). Note that the program under 16 T.A.C. 25.480(g)(2)(A) is NOT limited to only "low-income" assistance, which is ostensibly the purview of PURA § 17.007

"ARM notes that the bill assistance program requirement in 16 T.A.C. 25.480(g)(2)(A) does not contravene newly enacted PURA § 17.007(c) because it does not mandate a REP to incur the costs of a program for which it is not reimbursed, but nevertheless permits the REP to incur any such non-reimbursed costs at its own election," ARM said

ARM saw the need to stress this point despite the fact that the 16 T.A.C. 25.480(g)(2)(A) bill assistance program is not targeted or limited to "low-income" customers, is not specifically mentioned in PURA § 17.007, and was not cited in the strawman. Moreover, under the 16 T.A.C. 25.480(g)(2)(A) program, REPs do not "offer" bill payment assistance or bill discounts to customers, they only collect contributions. Assistance is provided to customers by agencies to which the REPs contribute, so it is even less implicated by PURA § 17.007(c)'s prohibition on mandating REPs "offer" an unreimbursed service. The fact that ARM saw fit to stress 16 T.A.C. 25.480(g)(2)(A) was not affected by PURA § 17.007(c), despite all of the foregoing, lends credence to the view that PURA § 17.007(c) could reasonably be read broadly.

And in such case, if not limited to only Lite-Up and any voluntary low-income replacements, PURA § 17.007(c) essentially prohibits a significant number of customer protections in the market, for which REPs are not reimbursed

Most notably, such a reading of PURA § 17.007(c) would prevent the PUCT from prohibiting disconnection for non-pay during extreme heat or other weather -- including emergency conditions such as Hurricane Harvey, since a DNP prohibition would be "other benefits" provided to customers that are not reimbursed

That's just a start. There are an innumerable amount of rules which could be stricken. For example, consider the current deposit waivers for victims of family violence -- an "other benefit" for which REPs are not reimbursed for carrying a greater bad debt risk since REPs lack a deposit for such customers

The 5% limit on the late payment fee? An "other benefit" provided to customers that places unreimbursed limits on REPs' ability to manage their collection costs

Even the 16-day minimum period for bill due dates would be unauthorized, because in providing such "other benefit" to customers, the PUCT would be requiring REPs to carry unreimbursed working capital costs by not allowing REPs to bill the customer sooner

We stress that we do not believe PURA § 17.007(c) actually prohibits any of these farcical examples, but rather, that the language was poorly written and was not subject to great scrutiny, and thus should not be used as the sole linchpin for fundamental market changes, given its ambiguous and tortuous meaning. Clearly PURA § 17.007(c), with its prohibition on unreimbursed mandates, did not wipe out DNP protections or countless other rules. However, its application is not as cut-and-dried as what some REPs are proposing. What are "other benefits"? What does, "not reimbursed," mean in the context of benefits which do not give a direct monetary benefit to the customer (as opposed to a discount)?



-- By Paul Ring

Tags:
Texas   Customer Protection  

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