Part 2.
PUBLIC UTILITY COMMISSION OF TEXAS
Chapter 25.
SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS
Subchapter D. RECORDS, REPORTS AND OTHER REQUIRED INFORMATION
16 TAC §§25.71 - 25.74, 25.76, 25.81, 25.83, 25.89
The Public Utility Commission of Texas (commission) adopts
amendments to §25.71, relating to General Procedures, Requirements and
Penalties; §25.72, relating to Uniform System of Accounts; §25.73,
relating to Financial and Operating Reports; §25.74, relating to Reports
on Sale of Property and Mergers; §25.76, relating to Gross Receipts Assessment
Report; §25.81, relating to Service Quality Reports; §25.83, relating
to Construction Reports; and §25.89, relating to Report of Loads and
Resources with changes to the proposed text as published in the March 24,
2000,
Texas Register
(25 TexReg 2507). The
proposed amendments are necessary to modify reporting requirements to conform
to the Public Utility Regulatory Act (PURA) as amended by Senate Bill 7, Act
of May 21, 1999, 76th Legislature, Regular Session, chapter 405, 1999 Texas
Session Law Service, 2543 (Vernon) (SB7). These amendments were adopted under
Project Number 21232.
The commission received comments on the proposed amendments from Austin
Energy; Brazos Electric Power Cooperative, Inc. (Brazos); Greenville Electric
Utility System, the City of Denton, and the City of Garland (collectively,
Cities); San Antonio City Public Service (CPS); and Texas Electric Cooperatives,
Inc. (TEC).
All parties commented on the jurisdiction of the commission over municipally
owned utilities and electric cooperatives, citing PURA §40.004 and §41.004,
which enumerate specific purposes for which the commission has jurisdiction.
By explicitly excluding municipally owned utilities and electric cooperatives
from the definition of the term electric utility, PURA has made a further
distinction between the statute's treatment of these entities and its treatment
of investor owned utilities.
The commission agrees with the commenters that its jurisdiction over municipally
owned utilities and electric cooperatives is limited and has undertaken these
amendments in order to remove reporting requirements that are no longer within
the commission's authority. The commission intends to require reports from
municipally owned utilities and electric cooperatives only to the extent necessary
to carry out its statutory responsibilities. In doing so, the goal of the
commission is to collect such information in the least burdensome manner possible,
while retaining the administrative efficiency gained by uniformity. These
amendments strike a fair and equitable balance among those concerns and are
consistent with the commission's authority over municipally owned utilities
and electric cooperatives.
§25.71, relating to General Procedures, Requirements,
and Penalties
Brazos and TEC stated that electric cooperatives should be excluded from
the general applicability of the reporting rules. They proposed language to
indicate that the rules shall apply to electric cooperatives only where explicitly
stated.
The commission agrees and has amended the rule so that electric cooperatives
and municipally owned utilities are excluded from the general applicability
of the reporting rules, unless otherwise specified in a specific section.
Brazos and TEC stated that special reports required in §25.71(g) should
only be required in accordance with the commission's jurisdiction under PURA §41.004.
TEC provided suggested language to accomplish this.
The commission agrees and has incorporated the concept proposed by TEC
in the rule as amended.
§25.72, relating to Uniform System of Accounts
Brazos and TEC stated that the commission does not have the authority to
require electric cooperatives to keep a uniform system of accounts; Brazos
is required to keep accounts in accordance with Rural Utilities Service requirements.
A cooperative's accounting method lies within the jurisdiction of the cooperative's
board of directors. Therefore, Brazos recommended deletion of forms of the
phrase "electric cooperative" from the rule as proposed.
The commission disagrees with the commenters. For purposes of reporting
transmission costs, electric cooperatives are required to utilize a uniform
system of accounts "as will be adequately informative for all regulatory purposes."
In response to Brazos' assertion regarding the board of directors' jurisdiction
over this issue, subsection (d) provides that an electric cooperative may
adopt an alternative system of accounts upon notification to, not the approval
of, the commission. The rule specifically mentions the Rural Utilities Service
requirements as an example of such an alternative.
§25.74, relating to Reports on Sale of Property
and Mergers
Brazos and TEC stated that the commission cannot require a report on the
sale of property or on a merger, given that such decisions are within the
sole discretion of the cooperative's board of directors. Brazos recommended
that the proposed amendment be deleted.
Cities, Austin Energy, and CPS suggested that the proposed language be
modified to remove any implication that a sale, acquisition, lease or rental
by a municipal utility is conditioned upon report under §25.74(e). Cities
indicated such a modification could be accomplished by requiring the reporting
of these activities in annual generating capacity reports. CPS provided suggested
language for §25.74(e) to require reporting of a sale, acquisition, lease
or rental of generating facilities, without conditioning such activities on
the filing of the report with the commission.
The commission agrees with Cities, Austin Energy, and CPS and has adopted
CPS's suggested language for application to both electric cooperatives and
municipally owned utilities.
§25.76, relating to Gross Receipts Assessment
Report
Brazos suggested adding the phrase "subject to the jurisdiction of the
commission," which is used in this section, throughout the reporting requirements
to indicate that cooperatives are required to file reports with the commission
only under limited circumstances.
The commission disagrees that such language is necessary. Proposed §25.71(a)
states, "(t)his chapter does not apply to municipally owned utilities or electric
cooperatives unless otherwise specified." The inclusion of the phrase in proposed §25.76
is a clarification that is also found in the statutory language addressing
this provision.
§25.81, relating to Service Quality Reports
Brazos and TEC stated that the commission does not have the authority to
require service quality reports from electric cooperatives; a cooperative's
board of directors has exclusive authority to monitor and enforce service
quality standards.
The commission agrees and has amended the proposed rule accordingly.
§25.83, relating to Construction Reports
Brazos noted that §25.101, referenced in §25.83, does not make
a distinction between generation and transmission requirements for certificates
of convenience and necessity. Brazos further stated that electric cooperatives
have been specifically exempted from any generation- related certificate requirements
by PURA §37.051(c). TEC stated that the commission does not have the
authority to require preliminary construction report forms from electric cooperatives.
The commission concludes that the issues raised by Brazos and TEC should
be addressed in conjunction with an amendment to §25.101, which will
be considered in this project at some later date. In the interest of clarity,
the commission has changed the section number that is referred to in this
section from §23.31(c) to §25.101.
All comments, including any not specifically discussed herein, were fully
considered by the commission. In adopting this section, the commission makes
other minor modifications for the purpose of clarifying its intent.
These amendments are adopted under the Public Utility Regulatory
Act, Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement
2000) (PURA) which provides the commission with the authority to make and
enforce rules reasonably required in the exercise of its powers and jurisdiction,
including rules of practice and procedure, and specifically PURA §14.003
which grants the commission the authority to require reports of utilities
and to establish the form and frequency of such reports; §16.001, which
imposes an assessment on each public utility, retail electric provider, and
electric cooperative; PURA §39.155, which authorizes the commission to
require reports to assess market power; PURA §40.004, which authorizes
the commission to require of municipally owned utilities information relating
to the aggregate load and energy requirements of the state and information
relating to market power; and PURA §41.004, which authorizes the commission
to require of electric cooperatives information necessary to satisfy its responsibilities
relating to electric cooperatives, information relating to the aggregate load
and energy requirements of the state, and information relating to market power.
Cross Reference to Statutes: Public Utility Regulatory Act §§14.002,
14.003, 14.052, 16.001, 39.155, 40.004, and 41.004.
§25.71.General Procedures, Requirements and Penalties.
(a)
Who shall file. The record-keeping, reporting, and filing
requirements listed in this subchapter shall apply to all electric utilities
operating in the State of Texas. This subchapter does not apply to municipally
owned utilities or electric cooperatives unless otherwise specified. Moreover,
the provisions of this subchapter are applicable to all services provided
by the reporting entity.
(b)
Initial reporting. Unless otherwise specified in a section
of this subchapter, periodic reporting shall commence as follows:
(1)
Quarterly reporting. For records, reports and other required
information under this chapter, reporting shall begin with an initial filing
for the first fiscal quarter for which information is available.
(2)
Annual Reporting. For all reports and other required information
under this chapter, reporting shall begin with an initial filing for the most
recent fiscal year ending on or prior to April 30 of the first year the record,
report or other required information must be filed with the commission.
(c)
Maintenance and location of records. Records, books, accounts,
or memoranda required of an electric utility, as defined in the Public Utility
Regulatory Act, §31.002(6), may be kept outside the State of Texas so
long as those records, books, accounts, or memoranda are returned to the state
for any inspection by the commission that is authorized by the Public Utility
Regulatory Act.
(d)
Report attestation. All reports submitted to the commission
shall be attested to by an officer or manager of the electric utility or electric
cooperative under whose direction the report is prepared, or if under trust
or receivership, by the receiver or a duly authorized person, or if not incorporated,
by the proprietor, manager, superintendent, or other official in responsible
charge of the electric utility's or the electric cooperative's operation.
(e)
Information omitted from reports. The commission may waive
the reporting of any information required in this subchapter if it determines
that it is either impractical or unduly burdensome for any electric utility
or electric cooperative to furnish the requested information. If any such
information is omitted by permission of the commission, a written explanation
of the omission must be included in the report.
(f)
Due dates of reports. All periodic reports must be received
by the commission on or before the following due dates unless otherwise specified
in this subchapter.
(1)
Monthly reports: 45 days after the end of the reported
period.
(2)
Quarterly reports other than shareholder reports: 45 days
after the end of the reported period.
(3)
Semi-annual reports: 45 days after the end of the reported
period.
(4)
Annual earnings report: May 15 of each year.
(5)
Shareholder annual reports: seven days from the date of
mailing the same to shareholders.
(6)
Securities and Exchange Commission Filings: 15 days from
the initial filing date with the Securities and Exchange Commission.
(7)
Special or additional reports: as may be prescribed by
the commission.
(8)
Annual reports required by §25.76 of this title (relating
to Gross Receipts Assessment Report) shall be due August 15 of each year and
shall reflect transactions for the previous July 1 through June 30 reporting
period.
(9)
Annual reports required by §25.77 of this title (relating
to Payments, Compensation, and Other Expenditures) shall be due June 1 of
each year and shall reflect the transactions for the most recent calendar
year.
(g)
Special and additional reports. Each electric utility shall
report, on forms prescribed by the commission, special and additional information,
as requested, that relates to the operation of the business of the electric
utility. Electric cooperatives and municipally owned utilities may be required
to file special or additional reports to the extent such information is necessary
and is within the jurisdiction of the commission.
(h)
Penalty for refusal to file on time. In addition to penalties
prescribed by law, and §22.246 of the title (relating to Administrative
Penalties) the commission may disallow for rate making purposes the costs
related to the activities for which information was requested and not timely
filed.
§25.72.Uniform System of Accounts.
(a)
Each electric utility and electric cooperative shall keep
uniform accounts, in accordance with this section, of all business transacted.
The classification of electric utilities and electric cooperatives, index
of accounts, definitions, and general instructions pertaining to each uniform
system of accounts as amended from time to time shall be adhered to at all
times, unless provided otherwise by these rules, or specifically permitted
by the commission.
(b)
Classification. For the purposes of accounting and reporting
to the commission under this subchapter, each electric utility or electric
cooperative shall be classified as follows:
(1)
Major: electric utilities or electric cooperatives that
had in each of the last three consecutive years sales or transmission service
that exceeded any one or more of the following:
(A)
one million megawatt-hours of total sales;
(B)
100 megawatt-hours of sales for resale;
(C)
500 megawatt-hours of gross interchange out; or
(D)
500 megawatt-hours of wheeling for others (deliveries plus
losses).
(2)
Nonmajor: electric utilities or electric cooperatives that
are not classified as "major" as defined in paragraph (1) of this subsection.
(c)
System of accounts. For the purpose of accounting and reporting
to the commission, each electric utility and electric cooperative shall maintain
its books and records in accordance with the following prescribed uniform
system of accounts:
(1)
Major: uniform system of accounts as adopted and amended
by the Federal Energy Regulatory Commission (FERC) for major electric utilities
and electric cooperatives or other commission-approved system of accounts
as will be adequately informative for all regulatory purposes.
(2)
Nonmajor: uniform system of accounts as adopted and amended
by the FERC for nonmajor electric utilities and electric cooperatives or other
commission-approved system of accounts as will be adequately informative for
all regulatory purposes.
(d)
Other system of accounts. When an electric utility or electric
cooperative has adopted a uniform system of accounts required or approved
by a state or federal agency other than the FERC (e.g., United States Department
of Agriculture - Rural Utilities Service), that system of accounts may be
adopted by the electric utility or electric cooperative after notification
to the commission.
(e)
Merchandise accounting. Each electric utility and electric
cooperative shall keep separate accounts to show all revenues and expenses
resulting from the sale or lease of appliances, fixtures, equipment, directory
advertising, or other merchandise.
(f)
Accounting period. Each electric utility and electric cooperative
shall keep its books on a monthly basis so that for each month all transactions
applicable thereto shall be entered in the books of the electric utility or
electric cooperative.
(g)
Rules related to capitalization of construction costs.
Each electric utility and electric cooperative shall accrue allowance for
funds used during construction on construction work in progress to the extent
not included in rate base. In the event construction work in progress is included
in rate base pursuant to the rules in §25.231(c)(2)(D) of this title
(relating to Cost of Service), capitalization of allowance for funds used
during construction for electric utilities and electric cooperatives is allowed.
§25.73.Financial and Operating Reports.
(a)
Annual reports.
(1)
Each electric utility shall file with the commission the
same annual report required by the Federal Energy Regulatory Commission (FERC).
Such annual reports shall be filed with the commission on the same dates as
required to be filed with the FERC. Major electric utilities that are not
required to file such reports shall file with the commission an annual report
on the form prescribed by the FERC.
(2)
Each electric utility holding company subject to annual
reporting to the Securities and Exchange Commission and each electric utility
shall file with the commission three copies of its annual report to shareholders
and customers. Unless included in the annual report to shareholders and customers,
each electric utility shall file concurrently with the filing of such report
three copies of any audited financial statements that may have been prepared
on its behalf.
(b)
Annual earnings report. Each electric utility not required
to file an Annual Report pursuant to the Public Utility Regulatory Act (PURA) §39.257
shall file with the commission, on commission-prescribed forms, an earnings
report providing the information required to enable the commission to properly
monitor electric utilities within the state. Each transmission service provider
shall file with the commission a report that will permit the commission to
monitor its transmission costs and revenues pursuant to §25.193(a)(5)
of this title (relating to Procedures for Modifying Transmission Rates).
(1)
Each electric utility shall report information related
to the most recent calendar year as specified in the instructions to the report.
(2)
Each electric utility shall file three copies of the commission-prescribed
earnings report and shall electronically transmit one copy of the report no
later than the date prescribed in §25.71(f)(4) of this title (relating
to General Procedures, Requirements and Penalties).
(c)
Securities and Exchange Commission reports. Each electric
utility and electric utility holding company subject to reporting requirements
of the Securities and Exchange Commission shall file three copies of each
required report with the commission. Three copies of each such report including
10-Ks, 10-Qs, 8-Ks, Annual Reports, and Registration Statements filed with
the Securities and Exchange Commission shall be submitted to the commission
no later than 15 days from the initial filing date with the Securities and
Exchange Commission.
(d)
Duplicate information. An electric utility shall not be
required to file with the commission forms or reports which duplicate information
already on file with the commission.
§25.74.Reports on Sale of Property and Mergers.
(a)
An electric utility shall not sell, acquire, lease or rent
any plant as an operating unit or system in the State of Texas for a total
consideration in excess of $100,000 unless the electric utility reports such
transaction to the commission while pending or within 30 days after closing.
(b)
An electric utility shall not merge or consolidate with
another electric utility or public utility operating in the State of Texas
unless the electric utility reports such transaction to the commission while
pending or within 30 days after closing.
(c)
Electric utilities shall not purchase voting stock in another
electric utility or public utility doing business in the State of Texas, unless
the electric utility reports such purchase to the commission while pending
or within 30 days after closing.
(d)
Electric utilities shall not loan money, stocks, bonds,
notes or other evidences of indebtedness to any corporation or person owning
or holding directly or indirectly any stock of the electric utility unless
the electric utility reports such transaction to the commission while pending
or within 30 days after closing. A properly filed tariff change with respect
to energy conservation loans available to customers, who may or may not be
shareholders as described in this subsection, will be considered adequate
reporting to the commission.
(e)
An electric cooperative or municipal utility shall report
to the commission any sale, acquisition, lease, or rental of any generating
facilities in the State of Texas for a total consideration in excess of $100,000,
during the pendency of the transaction or within 30 days after closing.
§25.76.Gross Receipts Assessment Report.
Each electric utility , electric cooperative, and retail electric
provider subject to the jurisdiction of the commission shall file a gross
receipts assessment report with the state comptroller reflecting those gross
receipts subject to the assessment as required by the Public Utility Regulatory
Act on a form prescribed by the state comptroller. This report shall be required
on an annual basis for those companies that have elected to remit their assessment
annually and on a quarterly basis for those companies that have elected to
remit their assessment quarterly. Such reports and assessments shall be remitted
in accordance with the Public Utility Regulatory Act, Chapter 16, Subchapter
A.
§25.81.Service Quality Reports.
Each electric utility shall submit annual service quality reports no
later than February 14 of each year on a form prescribed by the commission.
§25.83.Construction Reports.
Each electric utility constructing a facility requiring reporting to
the commission under §25.101 of this title (relating to Certification
Criteria) shall report to the commission on the commission-prescribed preliminary
construction report form prior to the commencement of construction.
§25.89.Report of Loads and Resources.
Each transmission service customer that submits an annual report of
loads and resources to the Electric Reliability Council of Texas independent
system operator pursuant to §25.198(l) of this title (relating to Initiating
Transmission Service) or other reliability council shall file a copy with
the commission and maintain a copy of supporting documentation for five years.
If no such annual report is prepared, the transmission service customer shall
maintain a record of the load and resource documents prepared in the normal
course of its activities for five years.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on June 8, 2000.
TRD-200004033
Rhonda Dempsey
Rules Coordinator
Public Utility Commission
Effective date: June 28, 2000
Proposal publication date: March 24, 2000
For further information, please call: (512) 936-7308
16 TAC §25.100
The Public Utility Commission of Texas (commission) adopts
the repeal of §25.100 relating to Other Records, Reports, and Information
that May be Required with no changes to the text as published in the March
17, 2000,
Texas Register
(25 TexReg 2239).
This section is not necessary as the information is provided as an appendix
to the commission's substantive rules in Chapter 25. This appendix provides
more accurate information as a result of frequent updates without the restrictions
of a rulemaking proceeding. The appendix is available through the commission's
Central Records and on the commission's web site. This repeal is adopted under
Project Number 22047.
The commission received no comments on the proposed repeal.
This repeal is adopted under the Public Utility Regulatory Act,
Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides
the commission with the authority to make and enforce rules reasonably required
in the exercise of its powers and jurisdiction.
Cross Reference to Statutes: Public Utility Regulatory Act §14.002.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on June 8, 2000.
TRD-200004034
Rhonda Dempsey
Rules Coordinator
Public Utility Commission
Effective date: June 28, 2000
Proposal publication date: March 17, 2000
For further information, please call: (512) 936-7308
16 TAC §§25.105, 25.109, 25.111
The Public Utility Commission of Texas (commission) adopts
an amendment to §25.105 relating to Registration and Reporting by Power
Marketers without changes to the proposed text as published in the March 17,
2000,
Texas Register
(25 TexReg 2240). The
commission adopts new §25.109 relating to Registration of Power Generation
Companies and Self-Generators and new §25.111 relating to Registration
of Aggregators with changes to the proposed text as published in the March
17, 2000,
Texas Register
(25 TexReg 2240).
Project Number 21082 has been assigned to this proceeding. The amendment and
new rules are necessary to implement provisions of the Public Utility Regulatory
Act (PURA) §§39.351, 39.353, 39.354, 39.3545, 39.356 and 39.357.
The §25.105 amendment retains existing requirements for power marketers
but eliminates requirements for exempt wholesale generators (EWGs) and qualifying
facilities (QFs), in order to eliminate duplication with the proposed new
requirements for power generation companies (PGCs). Section 25.109 establishes
registration requirements and procedures for power generation companies, including
exempt wholesale generators and qualifying facilities, that intend to sell
electricity at wholesale. It also establishes registration requirements and
procedures for self-generators that generate more than one megawatt of electricity
but do not intend to sell electricity at wholesale. Section 25.111 establishes
registration requirements and procedures for persons and public entities seeking
to aggregate the loads of electricity customers.
A public hearing on the amendment and proposed sections was held at commission
offices at 9:30 a.m. on April 18, 2000. Representatives from Alcoa Inc. (Alcoa),
Central and South West Corporation (CSW-REP), Consumers Union, Texas Legal
Services Center and Texas Ratepayers' Organization to Save Energy (collectively,
Consumers), East Texas Cooperatives, Office of Public Utility Counsel (OPUC),
Reliant Energy Inc. (Reliant), Southwestern Public Service Company (SPS),
TXU Electric Company (TXU), and TXU and CPL Cities (TC Cities) attended the
hearing and provided comments. To the extent that these comments differ from
the submitted written comments, such comments are summarized herein.
The commission received written comments on the proposed amendment to §25.105
from Alcoa. Comments on §25.109 were received from Brazos Electric Power
Cooperative, Inc. (Brazos), the City of Plano (Plano), El Paso Electric Company
(EPE), SPS, Texas Industrial Energy Consumers (TIEC), TXU Power Generation
Company (TXU-PGC), and reply comments from OPUC, TIEC, and TXU-PGC. The commission
received comment on §25.111 from the City of Austin d/b/a Austin Energy
(Austin), the Commercial Ratepayer Coalition (CRC), Consumers, CSW-REP Retail
Electric Provider (CSW-REP), OPUC, Plano, SPS, TC Cities, Texas Electric Cooperatives,
Inc. (TEC), and TXU Retail Electric Provider (TXU-REP). The commission also
received reply comments on §25.111 from Consumers, the Cities of Denton,
Greenville, and Garland (DGG Cities), OPUC, Reliant, TC Cities, Texas Industrial
Energy Consumers (TIEC), and TXU-REP. Pursuant to commission staff request
at the public hearing, Austin, CSW-REP, OPUC, TC Cities, and TEC filed clarifying
comments on §25.111.
§25.105. Registration and Reporting by Power
Marketers
Alcoa noted that the elimination of EWGs and QFs from §25.105 creates
the need for a conforming change in §25.345(i)(6), concerning the submission
of generation site information, and recommended either deletion or change
to the reference.
The commission agrees to a conforming change to §25.345(i)(6) relating
to Recovery of Stranded Costs Through Competitive Transition Charge (CTC),
and plans to address it in Project Number 21232,
Rule Changes to Conform to the Electric Restructuring Act.
§25.109. Registration of Power Generation
Companies and Self- Generators
TIEC said that it generally supports the proposed rule and believes that
the rule reflects compromise by various parties as a result of the commission
workshops. EPE requested new language be added to state that §25.109
does not apply to a utility that is not subject to PURA Chapter 39, pursuant
to PURA §39.102(c), until the expiration of its rate freeze period.
The commission declines to make the change requested by EPE; however, it
agrees that EPE is not required to register as a PGC until the expiration
of its rate freeze period. Until EPE is unbundled, it will continue to own
transmission and distribution facilities. As an owner of transmission and
distribution facilities, EPE does not meet the definition of "power generation
company" in PURA §31.002(10), and therefore it is not required to register
as a PGC under this rule.
Alcoa commented that the references in subsection (a) to ownership are
incomplete because the status of someone as a PGC pursuant to PURA §31.002(10)
is based not on ownership of generation, but on being someone who is generating
electricity. Alcoa recommended the references be changed to "owns or operates."
Alcoa also recommended a new paragraph be added: "(4) Whenever ownership and
operation are not in the same person, the owner and operator may elect which
person shall be responsible for the registration as a PGC."
The commission declines to make the changes recommended by Alcoa. Notwithstanding
the definition of "power generation company" in PURA §31.002(10), the
commission believes that ownership of generation facilities is an essential
characteristic of a power generation company. For example, a key safeguard
against market power in a competitive market is PURA §39.154(a) which
provides that a power generation company may not own and control more than
20% of the installed generation capacity located in, or capable of delivering
capacity to, a power region. One of the purposes of registration is to facilitate
the enforcement of PURA §39.154(a). If the commission were to register
the parties who operate generation as PGCs instead of the parties who own
generation, it is conceivable that an owner could avoid the 20% limit in PURA §39.154(a).
TXU-PGC noted that the definition of "potentially marketable capacity"
in PURA §39.154(d) does not contain any threshold capacity level. TXU-PGC
argued that the commission should revise the one MW threshold capacity level
in the self-generation registration requirement in paragraph (a)(2) so that
the threshold would apply to the self- generating entity in lieu of each facility.
Alternatively, TXU-PGC recommended that the meaning of "electric generating
facility" in paragraph (a)(2) be clarified so that it refers to all generating
units at a location. TIEC disagreed with TXU-PGC's recommendations, asserting
that many large commercial and industrial companies have small generators
that are used for backup or supplemental self-use; and requiring these companies
to submit information on each facility would be burdensome. TIEC added that,
transaction costs make it unlikely that power generated by a facility under
one MW would be sold in the wholesale market.
The commission concludes that the term "generating facility" in this section
should refer to all generating units at a location, whether the facility is
a PGC facility or a self- generation facility. Therefore, the commission adds
a definition of "generating facility" to subsection (b) consistent with the
language TXU-PGC recommended. The commission's view is that registration requirements
for self-generators are not burdensome, and the companies TIEC describes would
likely be self-generators, so the least burdensome registration requirements
would apply.
Parties had concerns about the use of the word "person" in the rule, especially
as it concerned the applicability of the rule. TEC commented that Senate Bill
7 (Act of May 21, 1999, 76th Legislature, Regular Session, chapter 405, 1999
Texas Session Law Service 2543, 2591 (Vernon) (codified as an amendment to
the Public Utility Regulatory Act, Texas Utilities Code Annotated §§39.351,
39.353, 39.354, 39.3545, 39.356, and 39.357)) excludes electric cooperatives
from the definition of "electric utility," "person," and "corporation." Plano
noted that the proposed rule did not include a definition of "person." Brazos
noted that §25.109(b) should include a definition of "person" that is
consistent with PURA §11.003(14) or that §25.109(a) should exclude
electric cooperatives from the application. OPUC disagreed, asserting registration
by electric cooperatives is important for both safety and reliability reasons.
The commission agrees that electric cooperatives and municipal corporations
are not required to register as PGCs or self-generators. Consequently, the
commission adds to §25.109(b) a definition of "person" consistent with
PURA §11.003(4). The commission notes, however, that electric cooperatives,
municipal corporations, and other entities that own generation and offer electricity
for sale in the state are subject to periodic reporting requirements pursuant
to PURA §39.155(a).
Alcoa asserted that the requirement of self-generators that have more than
ten MW to provide net dependable capability (NDC) ratings would impose significant
engineering costs on self-generators who are not otherwise required to calculate
these ratings. It recommended that self-generators should register using nameplate
ratings instead of NDC. TIEC agreed with Alcoa.
SPS commented that references to "nameplate capacity" in subsection (c)
should be replaced with the term "nameplate rating" since that term is defined
in §25.109(b)(1). SPS also recommended deleting the word "capacity" in
the title of subsection (c).
The commission agrees that a requirement for self-generators to report
NDC as part of their registration could result in significant costs for self-generators
that do not otherwise need to calculate NDC. The commission amends §25.109(c)(3)
to allow self-generation units that are not required to provide or keep a
record of NDC by the reliability council in which they operate, or by the
independent organization for the power region in which they operate, to use
the nameplate rating. The commission deletes the word "capacity" from paragraphs
(c)(2) and (3), but retains "capacity" in the title of subsection (c) to indicate
the type of ratings addressed in the subsection.
Alcoa argued that paragraphs (i)(1) and (2), which require compliance with
Independent System Operator (ISO) reliability standards, are in conflict with
PURA §39.151(l) with respect to a QF serving a steam host and selling
power into the wholesale market. Alcoa argued it is inappropriate to designate
paragraphs (i)(1) and (2) as automatic and significant violations of PURA
when they may be exempt under the statute. Alcoa recommended adding language
consistent with PURA §39.151(1). TIEC endorsed Alcoa's recommendation.
With regard to paragraph (i)(6), Alcoa and TXU-PGC argued that suspension
or revocation of a registration, certification, or license by any state or
federal authority should not automatically rise to a level that would warrant
suspension or revocation of PGC registration. Alcoa recommended deleting paragraph
(i)(6), although it said the commission could require a PGC to report any
suspensions or revocations within a reasonable period, such as 30 or 45 days.
TXU-PGC recommended revising paragraph (i)(6) so that it would refer only
to suspension or revocation of an authorization to generate electricity. In
reply comments, OPUC opposed the deletion of paragraph (i)(6), arguing that
suspension or revocation of a license by another state or federal authority
may reflect a violation of PURA if the generator in question is conducting
similar activities in Texas. OPUC proposed notification within 72 hours as
an appropriate compromise and said that TXU-PGC's proposed revision would
be acceptable.
The commission declines to make these changes to subsection (i) because
it does not intend for the actions in subsection (i)(1) through (8) to "automatically"
result in suspension or revocation, nor does the language imply such automatic
action. The commission will exercise discretion in suspending or revoking
the registration of a PGC. With regard to PURA §39.151(l), that section
precludes an independent organization from adopting reliability rules that
impede any manufacturing process associated with an industrial generation
facility. This section of PURA is to be implemented by the independent organizations
and need not be reflected in the registration rule. TXU-PGC's proposed revision
would limit the commission's review of suspensions and revocations in other
jurisdictions to those licenses that relate to the generation of electricity
and, therefore, is not adopted.
In reply to various recommendations from parties for clarification changes,
the commission also makes numerous non-substantive changes to the published
rule.
§25.111. Registration of Aggregators
The comments reflected some confusion concerning the different types of
aggregators and the application of various PURA and rule provisions to each
type. The most common point of confusion is that, in the published rule, private
"persons" could be "public aggregators." To reduce the possibility for confusion
in the future, the commission replaces the terms "private aggregator" and
"public aggregator" with "Class I" and "Class II" respectively. Because of
the varying eligibility and operational restrictions on Class II aggregators
in the law, Class II contains four subclasses. In general terms, Class I aggregators
are private entities that aggregate private entities; Class II.A aggregators
are private entities that aggregate public entities; Class II.B aggregators
are political subdivision corporations, as defined in the rule, that aggregate
public entities; Class II.C aggregators are municipalities or other political
subdivisions that aggregate citizens who choose to participate; and Class
II.D aggregators are private entities that contract with a public entity to
administrate citizen aggregation. These classifications are based on statutory
provisions that describe the types of entities that may provide aggregation
services and the related operational parameters.
This preamble summarizes the positions of parties in the terms they used
in comments, which were those of the published rule. Parties' use of the term
"public aggregator" is interpreted to include all of the kinds of aggregators
now called "Class II" because that was the term used in the published rule.
However, in some instances, where the context so indicated, comments referring
to "public aggregators" were interpreted narrowly to indicate only Class II.B
and II.C aggregators.
Similarly, the use of the term "person" may engender confusion. As defined
in the rule, it includes individuals, partnerships, mutual or cooperative
associations, and corporations, but excludes municipal corporations, electric
cooperatives, political subdivisions, or political subdivision corporations.
Therefore, provisions of the rule that apply to "persons" do not apply to
those entities that are excluded from the definition, regardless of which
class of aggregator is at issue.
PURA leaves much that is unspecified concerning the role of aggregators
in the restructured market. The commission adopts this rule with the goal
of leaving as much to market forces as possible while upholding its charge
to protect the public interest. Several features of the restructured market
should be noted at the outset. First, the REP is the designated point of customer
contact. As such, a relationship between the customer and the REP is mandatory
in the procurement of electricity while the involvement of an aggregator as
an intermediary is optional to REPs and customers. Second, a REP cannot be
expected to negotiate against itself on behalf of a customer group, and this
is a fundamental component of the differences between REPs and aggregators.
Third, some of the activities inherent in the REPs' role resemble aggregation
services or have the same effect. For example, a REP, by virtue of its market
role, negotiates for the purchase of power for all of its customers in the
aggregate. Further, if a REP wishes to attract a particular type of customer,
it can offer the group of customers with its desired profile an improved rate
and pursue them through marketing operations. The REP does not need to be
a registered aggregator to tailor and market services to meet customers' needs.
A REP would not be expected to organize customers to purchase electricity
from another REP.
Preamble Question Number 1: The proposed rule
is drafted from the perspective that aggregators negotiate with retail electric
providers (REPs) on behalf of a group of electricity customers. However, similar
services could be provided to customers by a consultant without direct negotiation
with a REP on behalf of the customers. The commission invites comments on
whether the rule draws an appropriate distinction between consultation and
aggregation services.
Consumers disagreed with the question's premise and stated that the proposed
rule does not assume that aggregators will negotiate entirely on behalf of
customers, since the rule allows REP affiliates to register as aggregators.
Consumers and OPUC commented that REP affiliates should be prohibited from
becoming aggregators to avoid conflict of interest. OPUC argued that an aggregator
that is associated with a REP will have a strong incentive to bring its customers
to its associated REP, becoming, in effect, the REP's marketing arm.
Consumers argued that the disclosure to the customer of an aggregator's
affiliation to a REP does not remove the incentive for an aggregator to favor
its affiliated REP. Consumers proposed that, should the commission permit
aggregator affiliates of REPs, the commission should require those aggregators
to follow a strict code of conduct with their REPs, including disclosures
to customers, separate books and records, and limitations on communications
between the aggregator and the affiliated REP. Consumers clarified that, if
affiliate relationships are not prohibited, it would seek arm's- length transactions
between REPs and affiliate aggregators, as well as disclosure requirements
about the affiliate relationships.
TXU-REP and Reliant objected to Consumers' suggested prohibition of aggregators
affiliated with REPs. Reliant argued that the Legislature did not expressly
grant the commission the authority to forbid affiliation between an aggregator
and a REP in Senate Bill 7. Reliant said that it is unnecessary for the commission
to infer power to prohibit affiliate relationships because it has the authority
to enact rules ameliorating the potential harms described by Consumers and
OPUC. Reliant argued that an aggregator who places the interest of an affiliated
REP above the interests of its own customers would lose customers, and that
the rule's disclosure requirements, along with a proposal to allow customers
to rescind a contract if such disclosures are not made, would adequately protect
customers. TXU-REP noted that if the rule were to preclude the REPs from having
aggregator affiliates, holding company systems would be forced to choose between
providing either aggregation or REP services.
The commission agrees with Consumers that the published rule allowed an
aggregator to represent the seller, or REP. The commission concludes that,
as a matter of policy, aggregators should only represent buyers of electricity.
Creating codes of conduct between affiliated aggregators and REPs to ensure
that the aggregator serves only the customer's interests would be a potentially
cumbersome method for ensuring that an aggregator represents the customer's
interest. The commission determines that the most efficient, and least confusing,
method for ensuring that an aggregator represents the customer's interest
is to prohibit aggregators from representing sellers of electricity and thus
from being an affiliate of a REP. Customer choice may be a confusing time
for some Texas customers, and the commission concludes that customers should
be assured that an aggregator represents its interests. The commission amends
adopted subsection (d) (3) and (4) (proposed (c)(3) and (4)) to prohibit an
aggregator from affiliating with a REP.
The commission disagrees with Reliant that the potential harm to customers
that could result from the aggregator's affiliate relationship with a REP
can be sufficiently ameliorated through disclosures and other customer protections.
The commission determines that aggregators should only represent buyers of
electricity, and not sellers, for reasons discussed above. However, the commission
determines that, to fully inform customer choice, disclosures such as those
mentioned by Reliant and provided for in adopted (f)(1)(A), (K), and (M) (proposed
(e)(1)(A), (K), and (M)) are still necessary.
Under PURA §39.353(d), the commission makes this amendment as a condition
necessary to regulate the reliability and integrity of aggregators. The commission
uses the authority granted in PURA §39.353(d) to establish the condition
for Class I aggregators. For Class II aggregators, the commission observes
that PURA §39.354 and §39.3545 and Local Government Code §303.001
and §303.002 all imply a buyer's agent relationship for Class II aggregators.
Class II.A aggregators, private persons that aggregate municipality and other
political subdivision customers, are defined by PURA as "authorized by two
or more municipal (or political subdivision) governing bodies to join the
bodies into a single (or multiple) purchasing unit(s)…." The commission
interprets the use of "authorized" in PURA §39.354 and §39.3545
to mean that the person is to be functioning as a "buyers' agent" for the
authorizing municipalities and other political subdivisions. The commission
also concludes that Class II.D aggregators, which are the only other types
of aggregators that are not public entities and which administrate citizen
aggregation programs pursuant to contracts with political subdivisions, should
not be affiliated with REPs. Therefore, the commission amends adopted subsection
(d)(4)(D) (proposed (c)(4)(D)) to indicate that non-affiliation with a REP
is a registration requirement for persons who are Class II.A and II.D aggregators.
The commission notes, however, that the public entity clients of the persons
who are Class II.A and II.D aggregators have the ultimate enforcement authority:
they are free to explicitly protect their "buyers' agent" interests in their
written authorizations and contracts. Adopted subsection (d)(4)(A) and (D)
(proposed (c)(4)(A) and (D)) are modified to reflect this conclusion.
The commission understands that it is possible for an aggregator to be
a buyer's agent and to receive its actual payment for its services from the
REP. The commission concludes that customers should be aware of aggregators
that form agency relationships with REPs, and amends adopted subsection (f)(1)(K)
(proposed (e)(1)(K)) and subsection (i) (2) (proposed (h) (2)), accordingly.
The commission also finds that adopted subsection (f) (1) (M), regarding disclosure
of compensation sources, also addresses this concern.
In addition, the commission adds a new subsection (b) purpose statement.
The new subsection explains the commission's finding that aggregators have
a buyer's agent function in the restructured market, and that REPs are not
aggregators. Subsection (b) also clarifies the rule's purpose of delineating
the registration and operating requirements for aggregators in the restructured
market. The inclusion of subsection (b) has changed the designation of the
subsections from the published version of this section. Hereafter, the commission
will reference the adopted designations in commission comments, and the proposed
designations in parties' comments.
CRC, TIEC, and CSW-REP stated that the rule accurately reflects the distinction
between aggregation services and consultation services. TXU-REP, TC Cities
and OPUC commented in support of the conclusion underlying the rule that aggregation
hinges upon the act of negotiating purchases of electricity for a customer
group. OPUC suggested that any consultant providing services similar to aggregation
services is likely to be an aggregator also.
CSW-REP stated that the rule properly recognizes that not all consultant
activities are activities that necessitate registration as aggregators. CSW-REP
articulated a range of activities that a consultant could undertake with individual
clients and without aggregating the loads of two or more electric service
customers for the purpose of purchasing electricity services. CSW-REP, CRC,
TXU-REP, and TC Cities indicated that aggregation services revolve around
the negotiation and procurement of electricity, and are distinguishable from
consultant services such as load profiling, energy audits, or advice on market
opportunities.
Consumers agreed that the rule should not draw a distinction between consultation
and aggregation services by listing the services that constitute each, since
it is currently not possible to anticipate all the various components of aggregation
services that may develop in the restructured market. Consumers maintained,
however, that the rule should contain a definition of "aggregation services"
and that the definition should parallel the statutory wording to include "services
relating to negotiating the purchase of electricity on behalf of two or more
buyers." Consumers indicated that such a definition would not encompass a
consultation service such as development of a load curve.
The commission concludes that it is not appropriate to have a definition
of "aggregation services" that articulates a particular type of service, because
such services will evolve in the restructured market. The commission agrees
that the roles of aggregators and consultants differ when a REP is contacted
for purposes of negotiating the purchase of electricity. Therefore the commission
inserts clarifying language to that effect in the definition of "aggregator."
With this clarification, the commission concludes that the rule draws an appropriate
distinction between consultation and aggregation services.
Preamble Question Number 2: The workshop transcripts
reveal that views vary widely on whether, and under what conditions, aggregators
should accept monies from electricity customers. The proposed rule attempts
to establish customer protection strategies without substantially constraining
possibilities for compensation to aggregators for aggregation services. First,
the rule prohibits private aggregators from accepting payments or prepayments
for electric service, but the rule is silent on this topic with respect to
public aggregators. Second, the rule imposes financial requirements only on
the aggregators who are persons, and who accept payments for aggregation services.
The rule does not impose financial requirements on public entities. The rule
does not dictate whether or not the aggregator is, functionally speaking,
a buyer's agent, a seller's agent, or both. Instead, for customer information,
the rule requires disclosure to the customers of the basis on which the aggregator
will be compensated for services, such as fees from the REP, pre-paid fees
from the customer, payments from the customer upon delivery of service, a
combination of the above, or other methods. This requirement is applicable
only to aggregators who are persons. The commission requests comment on whether
the rule strikes the proper balance in allowing market forces to operate while
protecting customers.
CSW and TC Cities made the overall comment that the proposed rule struck
the proper balance between market forces and customer protection. Other parties'
comments in response to this question clustered into three sub-issues: 1)
prohibitions on most aggregators for accepting payments for electric services;
2) varying financial requirements for aggregators; and 3) an aggregator's
role as either a buyer's agent or seller's agent.
TC Cities and Consumers argued that private aggregators should not accept
payments for electric service, but public aggregators could receive payments
for electricity, based on an interpretation of PURA §§39.353, 39.354
and 39.3545, that the former cannot take title to electricity and the latter
can.
TXU-REP proposed that aggregators, whether public or private, should not
be precluded from offering other competitive services, such as billing or
collection services, on behalf of a REP. TXU-REP maintained that an aggregator
could provide this service as an independent billing agent according to a
contract with a REP and that the REP would be ultimately responsible for the
proper handling of the billing transaction. TXU- REP proposed changes to proposed
subsection (c)(3)(C) for clarification.
The commission agrees with the implied conclusion of Consumers and TC Cities
that aggregators who cannot take title to electricity should not be allowed
to directly accept payments or prepayments for electric service. They could,
of course, accept payment for aggregation services. The commission concludes
that aggregators who cannot take title to electricity cannot directly accept
payments or prepayments for electric service. Apart from customer protection
concerns, allowing aggregators to collect monies for electricity services
could jeopardize arrangements for the securitization of funds, where applicable.
The commission amends adopted subsection (d)(3)(D) accordingly.
The commission agrees with TXU-REP that the prohibition on direct acceptance
of monies for electric service should not preclude an aggregator from contracting
with a REP as an independent billing agent to provide competitive billing
and collection services for the REP. The commission notes that such a contract
would not necessarily be limited to the customers aggregated by the aggregator.
The commission views the role of an independent billing agent as the administrator
of the billing and collection functions of a retail operation rather than
as the direct recipient of payments for electric services provided by the
REP. The commission is developing rules in Project Number 22255,
Rulemaking Proceeding for Customer Protection Rules for Electric Restructuring
Implementing Senate Bill 7 and Senate Bill 86
, that will articulate
standards for billing customers and collecting payments. The commission anticipates
that standards will include identification of the REP as a seller of electricity,
as the recipient of payment for service, and as the point of customer contact.
The commission may adopt rules specifying the conditions for the collection
of certain payments, such as the transition charges resulting from securitized
funds, which may require special payment procedures and credit and security
arrangements for REPs that collect such transition charges. For these reasons,
the commission finds that, while adopted subsection (d)(3)(D) prohibits most
aggregators from directly accepting payments for electric service, it does
not prohibit the aggregator from contracting with the REP to provide billing
and collection services for the REP according to terms and conditions established
by the commission. Registration as an aggregator does not explicitly permit
or disallow the registrant to act as an independent billing agent. The commission
amends adopted subsection (d)(3)(D) to clarify that aggregators can participate
in the competitive billing and collection services market as independent billing
agents when, and only when, they meet any applicable conditions.
On the second topic, whether differentiation of financial requirements
among aggregator types is appropriate, Consumers, TC Cities, and Plano supported
the rule's construction. The rule imposes the financial requirements specified
in proposed subsection (f) on aggregators that are persons but not on aggregators
that are municipalities, other political subdivisions, or political subdivision
corporations (i.e., not persons). Consumers proposed that persons who are
public aggregators should be required to file and update letters of authorization
from the public bodies they aggregate. Plano noted that the accountability
for public aggregators properly resides with elected and appointed officials
of public entities.
CSW-REP proposed that public aggregators who aggregate only the loads of
political subdivisions should not be subject to the rule's financial requirement
because they are acting in the public interest. CSW-REP also proposed that
the financial requirements should not apply to "affinity" organizations, such
as university alumni associations or other not-for-profit organizations providing
aggregation services to their members, or to market participants such as power
marketers or REPs. Consumers replied that CSW- REP's statement implies that
circumstances could occur under which the aggregator is an agent of the REP,
and reiterated their position that aggregators should not be affiliated with
REPs.
CRC argued that the legislature intended that private aggregators be subject
to additional conditions beyond those applied to public aggregators, since
PURA §39.353 prohibits selling or taking title to electricity, and requires
compliance with customer protection provisions, disclosure requirements, and
all marketing guidelines, and terms and conditions established by the commission
concerning reliability and integrity.
The commission concurs with Consumers that it is appropriate to apply the
financial requirements to all registering parties who meet the definition
of a person, regardless of which type of registration they seek, assuming
that they meet the other triggering criteria (intentions to collect payment
in advance of service). The financial requirements help to ensure the protection
of customers who are aggregated by a person. The commission concludes that
this provision appropriately includes affinity organizations, because these
financial requirements are necessary to protect customers when deposits or
other advance payments for aggregation services are collected. The commission
concludes that financial provisions are not appropriately applied to aggregators
that are public entities (Class II.B and II.C) because they are subject to
other measures of public accountability.
On the subject of whether the aggregator should be free to be either a
buyer's agent or seller's agent, CSW-REP and TXU-REP supported the proposed
rule in permitting aggregators to represent either buyers or sellers, because
that should be determined in the market. CRC proposed that REPs should be
permitted to act as aggregators, arguing that it would increase customer choice
and is not prohibited by PURA.
CSW-REP and CRC argued that the disclosure of an aggregator's source of
compensation under proposed subsection (e)(1)(M) is appropriate and adequate
protection to permit customers make informed judgments. TXU-REP opposed the
disclosure of the relationship to buyers or sellers, as well as the source
of an aggregator's compensation, contending that it is not reasonable to require
this type of disclosure in a competitive market.
Consumers and OPUC disagreed with the notion that it is possible for aggregators
to truly represent both buyers and sellers, stating that an aggregator representing
a seller does not have an incentive to always find the best negotiated electric
rate for the customer. Consumers argued that a proper balance between market
forces and customer protection can be established only by prohibiting a direct
or affiliated relationship between the aggregator and the REP. However, Consumers
acknowledged that REPs could still compensate unaffiliated aggregators if
that fact were disclosed to customers and if the unaffiliated aggregator were
actually working on behalf of the buyers rather than choosing a REP based
on the size of the compensation that he or she will receive from the REP.
Consumers argued that the sole role of the aggregator is to represent buyers
of electricity, whether the buyers are part of a "voluntary association" formed
for the purpose of purchasing electricity together, or whether the buyers
are part of an existing association that seeks to purchase electricity for
its members. Consumers stated that their vision of buyers does not include
a group of buyers who are gathered together on behalf of a REP by the REP's
agent or affiliate, and maintained that the commission cannot assume that
REP affiliates would negotiate only on behalf of customers. In addition, Consumers
argued that disclosure of payments to aggregators from REPs does not resolve
the conflict of interest problem. However, Consumers suggested several other
"code of conduct" controls in the event that the commission chooses to allow
affiliated aggregators, including separate entity requirements, arm's length
behavior, use of names similar to the REP's name, and disclosure of affiliate
relationships to customers. TC Cities agreed that aggregators should disclose
their agency relationships and added that all names under which the aggregator
operates should also be disclosed.
This issue is integrally related to the concerns discussed in Preamble
Question Number 1. The commission concludes that SB7 contemplated aggregators
as buyers' agents only and that, as a matter of policy, aggregators should
not be affiliates of REPs. The commission finds that customers are least likely
to be confused by the aggregator's role in the marketplace if aggregators
only act as the buyer's agent, and thus are not affiliates of REPs. As mentioned
previously, the commission concludes that customers should be aware of aggregators
that form agency relationships with REPs, and requires such disclosure in
adopted subsection (f)(1)(K) and subsection (i)(2).
Preamble Question Number 3: In certain instances,
statutory conditions that appear applicable to all aggregators are stated
in PURA §39.353, relating to Registration of Aggregators, but are not
restated in PURA §39.354 and §39.3545, which concern the registration
of public aggregators. Because a person can seek registration as both a private
and a public aggregator, a person could be subject to different operating
constraints for public customers than private customers. The commission requests
comment on the extent to which the following matters apply to all aggregators.
(a) First, PURA §39.353 states, "A retail
electric provider is not an aggregator." The commission interprets this sentence
to mean that certificated REPs cannot also be registered as aggregators that
register pursuant to that PURA provision. How should the absence of the sentence
in §39.354 and §39.3545 be construed? If REPs were allowed to register
as public aggregators, what would be the practical result?
Consumers, TC Cities, and Plano interpreted the absence of the statement
"a retail electric provider is not an aggregator," in PURA §39.354 and §39.3545
to mean that public aggregators are allowed to sell and take title to electricity,
and would therefore perform some REP functions. TC Cities argued that taking
title to electricity and REPs' relationship to aggregators are related issues,
and asserted that, since REPs take title to electricity, the Legislature must
have intended to specifically preclude private aggregators from taking title
to electricity. CRC interpreted the statement "(r)etail electric providers
are not aggregators" to simply mean that a certificated REP must go through
the registration process for aggregators. In that vein, CRC maintained that,
if the legislature had intended for aggregators and REPs to be mutually exclusive,
the language would have been stronger and more prohibitive, and PURA §39.352,
relating to certification of REPs, would contain similar language.
Conversely, TXU-REP, OPUC, and CSW-REP argued that the statement "(r)etail
electric providers are not aggregators" applies to all types of aggregators.
TXU-REP maintained that, because no specific statutory exception applies,
the statement should apply to public aggregators, as well. OPUC stated that
a REP cannot be an aggregator pursuant to PURA §39.353, a prohibition
that extends to a private REP acting as a municipal aggregator or a political
subdivision aggregator. CSW-REP argued that the statute is clear in prohibiting
an entity from being both a REP and an aggregator. CSW- REP asserted that
this principle applies to both private and public aggregators, since the functions
of REPs and aggregators are dependent upon whether they may take title to
electricity.
Consumers, TC Cities and CRC expressed no concern about REPs acting as
aggregators for certain entities. Consumers concluded that a REP that has
obtained the express authorization of a political subdivision could possibly
register as a public aggregator.
CRC proposed that REPs with the "requisite expertise," after proper disclosure,
should be allowed to provide aggregation services. According to CRC, the market
should provide a niche to serve those customer groups that choose to use a
third party to negotiate their electricity procurement, and maintained that
the proposed rule may inhibit the choices available to customer groups by
prohibiting REPs from acting as aggregators.
Plano and CSW-REP questioned the implications of a REP acting as an aggregator.
Plano questioned whether political subdivisions can be REPs and, as such,
be subject to disclosure requirements, and expressed concerns about the ability
of REPs to perform aggregation services in an unbiased, objective manner.
According to CSW-REP, combining the functions of REPs and aggregators would
create a variety of conflicts. CSW-REP added that the statute does not prohibit
a REP from creating an aggregator affiliate that can register as both a public
and private aggregator.
The commission concurs with CSW-REP that it is appropriate to distinguish
the role of the aggregator from the role of the REP. The commission concludes
that the aggregator's role is to negotiate with REPs on behalf of customers,
whereas a REP's role is to provide electricity to customers. REPs are also
intended to be a customer's primary contact point for electric service. The
commission finds that the statement "(r)etail electric providers are not aggregators"
was intended to set aggregators apart from REPs. It is a descriptive statement
speaking to inherent differences in roles rather than a prohibition applicable
to some aggregators and not others. The commission concludes that REPs may
not be aggregators in any of the aggregation scenarios provided for in PURA
or the Local Government Code.
Moreover, as is explained under the next question, the commission concludes
that, where all REPs take title to electricity, only one type of aggregator,
the political subdivision corporation, is granted authority to do so. While
the commission concurs that a difference between a REP and an aggregator is
the ability to take title to electricity, that is not the only, nor the most
significant difference. Taking title to electricity is inherent in and fundamental
to the role of the REP, but not to the role of the aggregator.
PURA §§39.353, 39.354, and 39.3545 all specify that aggregators
negotiate the purchase of electricity from REPs. The commission believes that
this distinction is an important one, since a REP will not negotiate with
itself to purchase electricity.
(b) Second, PURA §39.353 states, "Aggregators
may not take title to electricity." The commission interprets this sentence
to mean that aggregators registering pursuant to this provision may not accept
payment for electricity services from customers. How should the absence of
this sentence in PURA §39.354 and §39.3545 be construed? If the
prohibition does not apply to all aggregators, then persons who are registered
as both a private and a public aggregator could be in the position of taking
title to electricity for some customers, and accepting their payments, while
not doing so for others. What are the implications of such a result?
TC Cities, Plano, and CRC asserted that the prohibition against taking
title to electricity does not apply to public aggregators aggregating pursuant
to PURA §39.354 and §39.3545, since the absence of a prohibition
against taking title to electricity in those sections implies permission to
take title to electricity. TC Cities also commented on Local Government Code §303.002,
stating that a municipality contracting pursuant to Local Government Code §303.002(b)
with a private aggregator to administer an aggregation project on behalf of
municipal residents would be the only opportunity for an aggregator to take
title to and accept payments for electricity. TC Cities stated that, in that
situation, the private aggregator would have to register as a public aggregator,
and should have to face rigorous financial accountability and registration
requirements before taking title to the electricity being aggregated.
Plano posited that the prohibition against taking title to electricity
was included for private aggregators because of the significant liability
issues surrounding private individuals and entities taking title to electricity.
CRC stated that the rule should not impose conditions on public aggregators
that PURA did not extend to them.
OPUC stated that a private entity aggregating municipalities and political
subdivisions should not be permitted to take title to electricity, but indicated
that there are no limitations on public entities acting as municipal or political
subdivision aggregators.
TXU-REP disputed TC Cities', Consumers', and OPUC's assertion that all
public aggregators may take title to and sell electricity, since the governing
provisions of PURA and the Local Government Code dictate that only public
aggregators that form political subdivision corporations may take title to
and sell electricity. According to TXU-REP, PURA §39.353(b) defines the
generic term aggregator, a definition that prohibits taking title to or selling
electricity, for PURA §39.351 through §39.358. According to TXU-REP,
unless municipal aggregators or political subdivision aggregators are specifically
granted the power to sell or take title to electricity, they are forbidden
from doing so by the generally applicable definition of "aggregator" in PURA §39.353(b).
TXU-REP argued that a political subdivision corporation, operating pursuant
to Local Government Code §303.001, is the only entity that is specifically
granted the power to take title to electricity. CSW-REP maintained that the
fundamental difference between a REP and an aggregator is the ability to take
title to electricity, a distinction that must apply to both public and private
aggregators.
DGG Cities and TC Cities argued the limitations of PURA §39.353(b)
do not apply to public entities. They noted that PURA §39.353(b) defines
an aggregator as a person that joins customers, while the definition of "person"
in PURA §11.003(14) and (7) specifically excludes municipal corporations.
DGG Cities concluded that neither PURA nor the Local Government Code prohibit
a municipality acting as a political subdivision aggregator from taking title
to electricity.
The commission concludes that only Local Government Code §303.001
specifically provides for political subdivision corporations to "purchase
electricity," and thus take title to electricity. Local Government Code §303.002
and PURA §39.354 and §39.3545 do not contain similar provisions,
while PURA §39.353 clearly prohibits aggregators from taking title to
electricity. Looking first to PURA §39.354 and §39.3545, the commission
observes that two categories of aggregators are addressed in each: persons
who aggregate municipalities or political subdivisions pursuant to PURA, and
municipalities or political subdivisions aggregating pursuant to Local Government
Code §303. Local Government Code §303.001 creates a narrow exception
in authorizing political subdivision corporations to take title to electricity
acquired for public use by municipalities and other political subdivisions
that they aggregate. No such flexibility was built into Local Government Code §303.002,
which allows municipalities and political subdivisions to aggregate on behalf
of their electing private citizens. The commission finds no legal or policy
reason to read such an authorization into the provision where it is not expressly
stated. Under the statutory scheme, municipalities and political subdivisions
may act as aggregators, not resellers, of electric power to private citizens.
This statutory scheme is supportive of the commission's policy determination
that REPS serve as the primary customer contact for electric service. The
commission modifies adopted subsection (d)(3) and (4) to reflect this conclusion.
Preamble Question No. 4: From a customer perspective,
what are the differences between aggregators and REPs? How will a customer
be able to distinguish a REP from an aggregator? The commission invites comment
on ways, if any, this rule should further differentiate the role of the aggregator
in the market place from that of the REP.
Consumers stated that customers would not be able to distinguish a REP
from an aggregator if a REP were allowed to function in both capacities, or
if aggregators were allowed to affiliate with REPs, and asserted that disclosure
of affiliation does not solve the problem. OPUC argued that requiring residential
and small commercial electric customers to differentiate between a REP and
affiliated aggregator would be a significant and unnecessary burden to them.
TXU-REP, TC Cities, CSW-REP, and CRC described the different roles that
aggregators and REPs serve. TXU-REP stated that the distinction between REPs
and aggregators is that REPs sell electricity, but aggregators serve as intermediaries
negotiating for the purchase of electricity from any REP by customers and
fulfilling a different role in the market. TXU-REP asserted that this distinction
would be lost if the position of Consumers and OPUC was adopted. TXU-REP asserted
that the aggregator's identification of the REP as the seller of the electricity
in any billing materials, as required by PURA §17.102(2), will ensure
that the customer understands the key distinction between the aggregator and
the REP.
CSW-REP and TC Cities commented that the rule has already distinguished
aggregators from REPs to the extent currently possible. CSW-REP noted that
customers might not easily make the distinction in a newly competitive marketplace.
The commission agrees with Consumers that customers will not be able to
readily distinguish an aggregator from a REP if a REP is allowed to do both
functions, as discussed earlier. The commission concludes that the rule should
further differentiate the role of the aggregator in the market place from
that of the REP by keeping the two roles separate among market participants
and labeling the market participants accordingly: An aggregator represents
buyers of electricity, a REP is the seller of electricity, and the two shall
not be affiliated. The commission concludes that this separation of roles
will enable customers to determine which market participant provides each
function. While the REP may contract out marketing and other services that
are similar to aggregation services, aggregators are not allowed to contract
with REPs in any way that makes them, in effect, a "seller's agent."
However, the commission concedes that in a fully developed and healthy
competitive market, the prohibition on aggregator affiliation with REPs may
no longer be necessary. The commission intends to review the necessity of
this prohibition in light of one year of market experience. For this reason,
the commission adds a new subsection (k) to sunset the prohibition on aggregator
affiliation with REPs. The sunset is effective 18 months after the start of
customer choice, allowing time for a review and rulemaking proceeding after
one year of market experience.
General comments on the rule:
CRC stated that aggregation is a method for smaller electricity users to
benefit from a competitive electric retail market. According to CRC, some
commercial customers are successfully aggregating through organizations or
associations in states that are currently in the process of opening retail
electric markets. CRC noted that, in setting up an aggregation, association
members will need to determine if they will act as the aggregator, or if they
will hire a consultant to negotiate with REPs on their behalf, a decision
will depend on the amount of control the organization would like to keep over
its aggregation process. According to CRC, if the organization's members decide
to be directly involved in the negotiation process, the organization will
need to register as the aggregator; if the organization decides to hire a
consultant, the members will need to choose an entity registered as a private
aggregator. CRC maintained that this choice may be different from group to
group, and both options should be available.
The commission concludes that the rule does not preclude an organization
from acting as its own aggregator, and finds that the alternate registration
requirements contained in adopted subsections (f) and (g) may facilitate this
option for some organizations.
Texas Legal Services Center indicated that it would be helpful to clarify
in the rule that public aggregator refers to the type of entity being aggregated,
instead of the entity that is performing the aggregation.
The commission implemented the "Class I" and "Class II" terminology throughout
the rule to address this point.
As previously noted, the designation of subsections in the adopted rule
changed from the published rule because of the addition of a new subsection
(b), relating to purpose. Therefore, the commission will reference the proposed
designations in parties' comments and the adopted designations in commission
comments.
Adopted Subsection (a):
TEC stated that the following sentence in §25.111(a), "An electric
cooperative aggregating electric service customers outside of its certificated
service area shall register with the commission" is inconsistent with the
definition of "a person" in PURA §11.003, and recommended its deletion.
TXU-REP questioned the statutory authority for electric cooperatives to
act as aggregators outside their own service areas. TXU-REP pointed out that
PURA §41.055(11) gives the cooperative's board of directors the power
to make decisions affecting the cooperative's method of conducting business,
but asserted that such power is limited under Chapter 41 to serve customers
within their service territory. TXU-REP argued that, once a cooperative elects
to serve customers outside its territory, it becomes subject to significantly
increased oversight by the commission. As a result, TXU-REP reasoned, it would
be inconsistent with the provisions of PURA for the commission to permit an
electric cooperative to aggregate customers outside its service area without
any commission oversight. TXU-REP argued that registration is not a burdensome
requirement, and that all competitive aggregators, including electric cooperatives
aggregating customers outside their service areas, should be required to register
with the commission.
TEC retorted that the issue is not by what authority cooperatives are authorized
to engage in aggregation activities, but whether the commission has jurisdiction
to require registration by cooperatives wishing to perform such activities.
TEC pointed out that commission jurisdiction over electric cooperatives is
limited by PURA §41.004, which does not provide for commission jurisdiction
over the registration of electric cooperatives that aggregate the loads of
their member consumers. TEC asserted that PURA contains no provision supporting
commission jurisdiction over an electric cooperative aggregating load outside
its service area. Finally, TEC responded that PURA Chapters 39 and 41 were
consistent in that Chapter 41 pertains to electric cooperatives and Chapter
39, specifically §39.002, expressly includes provisions limiting its
applicability to electric cooperatives.
The commission agrees with TEC that the definition of person in PURA §11.003
does not include electric cooperatives. Further, the commission concludes
that PURA §39.002 is unambiguous: the requirements for aggregators in
PURA §39.353 do not apply to electric cooperatives. Therefore, the commission
deletes from adopted subsection (a) the sentence "An electric cooperative
aggregating electric service customers outside of its certificated service
area shall register with the commission." Correspondingly, the electric cooperative
cannot then represent itself as a commission- sanctioned aggregator. In line
with its policy determination that aggregators cannot fully function as a
buyer's agent while being affiliated with a REP, the commission cautions electric
cooperatives who elect choice against representing themselves as being a buyer's
agent for a customer group when the cooperative also functions as a REP.
The commission concludes that the provisions of PURA relating to the powers
of electric cooperatives in the restructured electric market are not entirely
clear. They might be construed to permit cooperatives to perform aggregation
services without registering, as TEC advocates. On the other hand, these provisions
might be construed as prohibiting any entity from performing such services
without registering. Because cooperatives have strong connections to the communities
where they operate, the commission anticipates that cooperatives are likely
to be responsive to their customers and preserve their customer good will.
For this reason, the commission refrains from making an interpretation of
law at this time and does not object to cooperatives performing aggregation
services without registering. The commission has the latitude to reconsider
its decision on this matter as the market develops, and will be concerned
if customers have bad experiences with cooperatives performing these services.
Proposed Subsection (b):
Consumers proposed language for subsection (b)(1) to parallel the statutory
definition of aggregation in PURA §39.002. Consumers also proposed a
final sentence to proposed subsection (b)(1) to clarify that, for purposes
of this definition, separately metered tenants are not a voluntary association,
maintaining that such language would protect tenants' customer choice in electricity
and prevent forced aggregation by landlords.
The commission concurs with Consumers that one customer negotiating for
energy for its own use at multiple locations is not an aggregator and is,
therefore, not required to register. However, the commission does not agree
that adopted subsection (c) must be modified, since adopted subsection (a)
states that the rule does not apply to this activity.
Consumers proposed a definition for Aggregation Services, to include "services
relating to negotiation." TIEC opposed the definition as overly broad, since
the definition could be construed to capture services provided by a consultant
not involved in the negotiations.
Consistent with the discussion in Preamble Question Number 1, the commission
concludes that the rule strikes the proper balance between aggregation and
consultation services, and declines to adopt Consumers' language. The commission
does, however, clarify the types of activities that an aggregator may be involved
with in adopted subsection (c)(2).
Consumers proposed new language for proposed subsection (b)(2)(A) to clarify
that aggregation services involve the purchase of electricity, as contrasted
with persons acting in connection with the sale of electricity, such as a
REP, REP's agent, or a broker. Consumers also proposed language to require
the disclosure of the basis for the fee or commission paid by a REP to a private
aggregator.
The commission declines to adopt Consumers' proposed language for adopted
subsection (c)(2)(A), and concludes that the amendment to the definition of
aggregator addresses Consumers' first point. The commission further concludes
that the disclosure requirement is adequately addressed in adopted subsections
(f)(1)(A), (K) and (M) and (i)(2).
TXU-REP recommended amending proposed subsection (b)(2)(B)(i) and (ii)
to add the concluding sentence, "A municipal aggregator that is not a political
subdivision corporation may not sell or take title to electricity." Plano
questioned why a definition of third party aggregators is included in a rule
that does not refer to such entities again, and sought clarification.
The commission concurs with TXU-REP that the only aggregator authorized
to take title to electricity is the political subdivision corporation. Rather
than modify the definitions, the commission makes this clarification in adopted
subsection (d). With respect to Plano's comment, the definition of third party
was not included in the published rule, and thus no clarification is necessary
on this point.
TEC stated that the second sentence of proposed (b)(3) is inconsistent
with the definition of "person" in PURA §11.003 (which specifically excludes
cooperatives) as applied to §39.353 (a) and (b), which establishes a
registration requirement for aggregation services. TEC recommended replacing
this sentence with the following: "Person - an individual, a partnership of
two or more persons having a joint or common interest, a mutual or cooperative
association, or a corporation, but not including a municipal corporation or
an electric cooperative." Plano commented that it is unclear whether REPs
are persons and recommended that, if REPs are included as persons, the definition
should so specify.
The commission concurs with TEC, and, pursuant to the discussion of adopted
subsection (a), modifies adopted (c)(3) accordingly. In reply to Plano, the
commission finds that the definition of persons is inclusive of REPS, but
the eligibility restrictions on persons who seek to register as aggregators
prohibit REPs from registering as aggregators. The issue of REPs not being
aggregators is discussed in Preamble Question Number 3a.
Plano proposed language to help distinguish suspension from revocation.
The commission finds that Plano's proposed language regarding suspension
and revocation closely approximates the language of the published rule, and
thus concludes that no further clarification is necessary.
Proposed Subsection (c):
TXU-REP proposed language to clarify that an aggregator should be able
to offer billing or collection services, as an independent billing agent.
The commission adopts the TXU-REP recommendation with a modification to
adopted subsection (d)(3)(D).
CSW-REP commented that the rule should clarify that an "affirmatively requesting
citizen" must be a resident of the political subdivision and that the citizen
has a verifiable arrangement with the political subdivision for that subdivision
to act as the citizen's aggregator.
The commission agrees that the term "affirmatively requesting citizen"
requires clarification, and changes adopted subsection (d)(4)(C) to clarify
that voluntary agreements of affirmatively requesting citizens must be verifiable.
SPS proposed language for proposed subsection (c)(4)(D) and (E) to require
public aggregators to comply with customer protection provisions, disclosure
requirements, and marketing guidelines, as well as reliability and integrity
requirements. DGG Cities refuted those comments, arguing that PURA does not
require municipalities that aggregate under PURA §39.353 or §39.3545
to comply with these same provisions. DGG Cities argued that when a municipality
acts as a public aggregator, it acts in the public interest and must answer
to its citizenry in a manner not required of private aggregators.
CSW-REP stated that the rule should clarify the role of a citizen aggregation
administrator and its relationship with the political subdivision; specifically,
that the administrator is the agent of the political subdivision and will
negotiate on behalf of the political subdivision with one or more REPs for
the purchase of electricity, but will not take title to such electricity.
Plano maintained that a third-party administrator performing services under
Local Government Code §303.002 should be required to register as a public
aggregator and be subject to all regulations applicable to public aggregators.
TC Cities did not propose changes to proposed subparagraph (c)(4)(D), relating
to an administrator of citizen aggregation, and commented that this subparagraph
does not, and should not, address the appropriate threshold of aggregation
activity that must take place before an administrator is hired. TC Cities
asserted that administrators do not need to register. TC Cities argued that
Local Government Code §303.002 does not limit aggregation to aggregators;
requiring third party administrators to register would render "third party"
meaningless, and administrators are already accountable to registered public
aggregators. Finally, TC Cities offered that an administrator's role should
be uniquely defined by contract and not defined in the rule.
The commission notes that adopted subsection (i)(2) requires all aggregators
to comply with the commission's education, disclosure and marketing guidelines
and rules, including those pertaining to customer protection, and declines
to adopt SPS' proposed language.
The commission concludes that, where municipalities or political subdivisions
aggregating public citizens pursuant to Local Government Code §303.002
elect to utilize outside administrators, in those instances in which the administrator
meets the definition of "person," the administrator must be registered as
an aggregator. This conclusion is based on the fact that this activity is
the only one available to a "person" under Local Government Code §303.002,
and aggregation by a "person" under Local Government Code provisions is captured
by the registration mandate in PURA §39.3545. The commission has modified
adopted subsection (d)(4)(D) to reflect this requirement of the law. The modification
allows an exception for the administrator who is an employee of the political
subdivision that is conducting citizen aggregation pursuant to Local Government
Code §303.002 because the commission is satisfied the political subdivisions'
public accountability systems are sufficient in that case.
Proposed Subsection (d):
CSW-REP contended that the rule created confusion regarding whether a public
aggregator must meet the requirements of proposed subsections (d) and (e),
and suggested that the commission consider revising these provisions to state
more specifically the requirements for public aggregators.
The commission agrees that the term "public aggregator" is confusing, since
both a person and a public body can act as a public aggregator. The commission
believes its adoption of the "Class I" and "Class II" terminology will help
interested parties distinguish the differences between types of aggregators.
The commission clarifies that adopted subsection (e) applies only to Class
II.B and Class II.C aggregators, and not to persons.
OPUC stated that political subdivisions aggregating pursuant to the Local
Government Code must follow the standards for local governments.
The commission concurs with OPUC, but does not find that any further revisions
to the rule are necessary to reflect this fact.
Proposed Subsection (e):
In response to CSW-REP's above comments, the commission clarifies that
adopted subsection (f) applies only to Class I, Class II.A, or Class II.D
aggregators, and not to municipalities, other political subdivisions, or political
subdivision corporations.
Consumers and TC Cities questioned the public policy reasons for allowing
a single aggregator to operate under numerous names, since it would create
difficulties in tracking complaints. According to TC Cities, customers should
have the best possible information to ensure that agency relationships are
revealed, and multiple operating names for aggregators might frustrate that
effort. TC Cities proposed language that would require a registering party
to provide all trade or commercial names to potential residential and commercial
customers.
The commission concurs with Consumers and TC Cities that multiple trade
or commercial names can be difficult to track, and can cause confusion for
customers, but declines to limit aggregators to two trade or commercial names.
As a remedy, the commission amends adopted subsection (f)(1)(A) to require
aggregators to disclose all trade and commercial names to customers when requesting
aggregation services.
CRC stated that proposed subsection (e)(1)(I) and (J) would impose additional
requirements of expertise on entities registering as an aggregator and could
be an obstacle for the development of aggregation by customer groups and smaller
entities. According to TXU-REP, the requirement would be more appropriate
for a certification process.
The commission revises adopted subsection (f)(1)(I) and (J) by adding the
words "if any," and concludes that this modification addresses CRC's concerns
with respect to these subparagraphs. The commission understands that some
information will not be applicable to certain registering parties; accordingly,
the commission's aggregator registration form will indicate that a response
of "not applicable" is an acceptable response. Concerning TXU-REP's comment,
the commission finds that information about prior experience is an important
component of understanding an aggregators' business practice, and concludes
that such information will be helpful in evaluating aggregator registration
requests. The registration process adopted in the rule requires commission
action on a submitted registration request before an aggregator may conduct
business. For that reason, the commission declines to delete adopted (f)(1)(I).
With respect to TXU-REP's comments concerning adopted subsection (f)(1)(J),
the commission finds that the names of subsidiaries and affiliates that provide
utility-related experience is an important component of understanding an aggregators'
business practice, and concludes that such information will be helpful in
evaluating aggregator registration requests. For that reason, the commission
declines to delete adopted subsection (f)(1)(J).
TXU-REP proposed the deletion of proposed subsection (e)(1)(K), stating
that the requirement would be more appropriate for a certification process.
CRC expressed concern that the requirement would impose additional requirements
of expertise on entities registering as an aggregator and could be an obstacle
for the development of aggregation by customer groups and smaller entities.
TC Cities proposed language to require disclosure of agency relationships
and the nature of agency agreements with REPs.
The commission's decision to disallow affiliate relationships to REPs renders
moot TXU-REP's comment, but adopted subsection (f)(1)(K) is kept in relation
to agency relationships to address TC Cities' concern of informing customer
choice. With respect to CRC's comments, the commission understands that some
information will not be applicable to certain registering parties; accordingly,
the commission's aggregator registration form will indicate that a response
of "not applicable" is an acceptable response.
TXU-REP commented that the requirement to disclose sources of compensation
to customers is not reasonable in a competitive market, since companies who
perform an intermediary role, such as delivering customers to a REP, do not
typically have to disclose the sources of their revenue in other competitive
markets. TXU-REP argued that the choice to disclose such information is the
aggregator's, and a customer will be able to choose whether or not to deal
with an aggregator that does not disclose its source of compensation.
Consumers expressed concern with TXU-REP's statement that an aggregator
affiliate of a REP should not be compelled to disclose its business arrangement
with customers. Consumers maintained that an aggregator affiliate of a REP
that has no obligation to disclose its business arrangement with its customers
is not negotiating in good faith on behalf of its customers. In such an arrangement,
according to Consumers, a customer may pay more, rather than less, for their
electricity. Consumers proposed prohibiting a direct or affiliated relationship
between the aggregator and the REP, but allowing REPs to compensate aggregators
(with previous disclosure to customers) would strike an appropriate balance
in protecting customers. Consumers asserted that such a proposal would work
much like an independent insurance agent; in such an arrangement, the agent
is paid a commission by the insurer, but still maintains the fiduciary obligations
to get the best deal for the customer. According to Consumers, using an aggregator
to secure customers for a specific REP serves no legitimate purpose, and could
be similar to third- party telemarketers working for long distance companies,
a situation that led to slamming.
The commission concludes that required disclosure of the source of an aggregator's
compensation to its customers is consistent with the mandate of PURA §39.101(b)
and (f), which direct the commission to adopt and enforce rules to ensure
that customers receive sufficient information to make an informed choice and
be protected from unfair, misleading, or deceptive practices. The commission
declines to delete adopted subsection (f)(1)(K).
Consumers proposed a new subparagraph to be added to proposed paragraph
(e)(1) that would require a person registering as a public aggregator to file
proof of authorization from the public entity, and to update the authorizations.
The commission agrees that a person aggregating a political subdivision
should be authorized by that political subdivision, and adds Consumers' language
as adopted subsection (f)(1)(R).
Proposed Subsection (f):
CRC maintained that prepayment by customer group members to cover expenses
incurred in contemplation of aggregation services could trigger the financial
requirements outlined in proposed subsection (f), and thus deter customer
groups from taking advantage of aggregation. Additionally, CRC commented that
expenses such as the cost of preparing load profiles should not trigger the
financial requirements, and proposed language to clarify this subsection.
The commission declines to adopt CRC's language, since the commission declines
to further differentiate between aggregation and consulting services, as discussed
in Preamble Question Number 1. The commission does, however, clarify the role
of the aggregator in adopted subsection (c)(2).
CRC proposed that the financial restriction in proposed subsection (f)(1)
cover only prepayments for aggregation services, since a constraint on all
types of payments could limit the methods in which a customer group could
choose to pay an outside consultant for aggregation services.
The commission concurs that the rule should protect only customer deposits
and advance payments for aggregation services because the protection of customer
payments is not at issue where the customer makes payment upon receipt of
a service.
While not proposed by any outside comments, the commission concludes that
increased specificity concerning acceptable financial resources would assist
new entrants in developing their options. The commission concludes that increased
specificity is beneficial in that it expands the types of acceptable financial
evidence that are acceptable for meeting the financial requirements of aggregators,
where applicable, and it standardizes the types of financial evidence available
to aggregators with those contemplated for REPs. Accordingly, the commission
amends adopted subsection (g)(1)(A) - (C) to include detailed financial evidence
information.
Proposed Subsection (g):
Consumers proposed language to be added to proposed section (g)(2), regarding
proprietary or confidential information, which would articulate the presumption
that information filed pursuant to the rule is public information. Consumers
proposed language would place the burden of establishing confidentiality on
the registering party.
The commission agrees that such an explanation would be helpful to new
entrants and clarifies adopted subsection (h)(2) to address Consumers' concern.
CSW-REP noted that proposed subsection (g)(3)(D) is silent with respect
to the consequences of commission rejection of an application, and suggested
that the commission clarify the consequences of rejection and next steps for
parties to undertake.
The commission adopts CSW-REP's suggestion and indicates in adopted subsection
(h)(3)(D) that unacceptable registrations are rejected without prejudice to
refiling.
According to TXU-REP, the commission has included requirements that are
appropriate only for a certification process, and has assigned itself the
power to reject an aggregator's registration. TXU-REP therefore recommended
the deletion of proposed subsection (g)(3)(D), relating to commission approval
or rejection of a registration request, and transferring the time period for
processing a registration to proposed subsection (g)(3)(B).
The commission declines to accept TXU-REP's proposed changes to adopted
subsection (h)(3)(B) and (D). The commission finds that the legislature granted
authority to revoke aggregator registrations and assess administrative penalties,
procedures that necessitate commission discretion to review and accept or
reject registration requests.
Proposed Subsection (h):
Austin commented that municipally owned utilities would promulgate the
customer protections contained in proposed subsection (h)(2) under their own
authority, consistent with PURA §40.055(a)(7).
The customer protections contained in adopted subsection (i)(2) were authorized
by PURA §39.101(a), (b), and (e). PURA §39.101(e) grants the commission
jurisdiction over all providers of electric service in adopting and enforcing
the rules necessary to protect the customer rights and entitlements granted
under §39.101(a) and (b). Austin maintains that PURA §40.055(a)(7)
grants the municipally owned utility the authority to promulgate the customer
protections granted by §39.101(a) and (b). The commission concurs with
this assessment; however, PURA §40.055 grants authority to promulgate
customer right and entitlement rules only for municipally-owned utilities
and not for municipalities or political subdivisions that are required to
register by PURA §39.354 and §39.3545 aggregators.
The commission concludes that PURA Chapter 40 specifically applies to municipally
owned utilities and not to municipalities. Nowhere in Chapter 40 is a municipally
owned utility granted authority to act as an aggregator. A municipality that
chooses to aggregate its public facility loads with those of other political
subdivisions must abide by Local Government Code §303.001 and join with
other municipalities or political subdivisions to form a political subdivision
corporation. A municipality that chooses to aggregate the loads of affirmatively
requesting citizens must abide by Local Government Code §303.002. PURA §39.354(a)
and (b) combine to require a municipality aggregating pursuant to Local Government
Code §303 to register. The commission therefore concludes that when municipalities
aggregate pursuant to either Local Government Code §303.001 or §303.002,
either they, or the political subdivision corporations they belong to, must
register under Chapter 39 and be subject to the customer protections of Chapter
39 that identify the customer protection provisions for aggregators.
Consumers proposed an amendment to proposed subsection (h)(4) to clarify
that material changes include new or amended authorizations for persons registering
as public aggregators.
The commission agrees that such information is important, and, as discussed
previously, has amended adopted subsection (f) to require this type of information.
With respect to adopted subsection (i)(4), the commission agrees that this
type of information is a material change, but concludes that the rule need
not delineate all material changes.
TXU-REP questioned whether proposed subsection (h)(7)(A), regarding the
use of financial resources, could be misconstrued to require an aggregator
to freeze such financial resources, and maintained that such a freeze would
impose and unnecessary hardship on some aggregators and limit entry into the
aggregation market. TXU-REP proposed a clarifying statement allowing registrants
to make reasonable withdrawals from a cash or equivalent account required
under proposed subsection (f)(1)(B) and (C).
The commission disagrees with TXU-REP. The commission concludes that such
protected funds should not be used as a source of financing by an aggregator,
particularly one that is unable to raise other forms of capital, and declines
to adopt TXU-REP's proposed language. The commission notes, however, that
the clarification of the types of financial evidence available in adopted
subsection (g) should provide aggregators with a greater choice of financial
alternatives to meet their customer protection requirements without putting
customers at risk.
Proposed Subsection (i):
The commission adds language to adopted subsection (j) to clarify that
significant violations "include, but are not limited to" adopted subsection
(j)(1) - (11).
TC Cities proposed language for proposed subsection (i)(12) that would
provide for revocation for failure to disclose agency and affiliate relationships
and all trade names to residential and commercial customers.
The commission concludes that adopted subsection (j)(2) and (j)(4) capture
the essence of TC Cities' proposal, and therefore no change to the rule is
necessary.
According to TXU-REP, proposed subsection (i)(6) should identify only the
suspension or revocation of any other aggregation registration, certification,
or license, since some state and federal licenses are insignificant or purely
administrative, and proposed language to that effect. TXU-REP maintained that
a one-time accidental or inadvertent switch of a customer's REP should not
be considered a significant violation; rather, a pattern of such switches
should be used as a significant violation justifying suspension or revocation.
The commission concurs with TXU-REP that some certificate revocations are
not associated with providing aggregation services, but clarifies that the
list of violations cited in adopted subsection (j) is not intended to be automatic
cause for revocation; rather the commission will address suspension or revocation
on a case-by-case basis. For this reason, the commission declines to adopt
TXU-REP's language.
All comments, including any not specifically referenced herein, were fully
considered by the commission. In adopting this section, the commission makes
other minor modifications for the purpose of clarifying its intent.
The amendment and new sections are adopted under the Public Utility
Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 1998,
Supplement 2000) (PURA) which provides the commission with the authority to
make and enforce rules reasonably required in the exercise of its powers and
jurisdiction; and specifically, §39.351, which grants the commission
authority to require registration of power generation companies; §39.353,
which grants the commission authority to establish terms and conditions necessary
for the regulation of the reliability and integrity of aggregators; §39.354
and §39.3545, which require the commission to develop registration procedures
for municipal and political subdivision aggregators; §39.356, which grants
the commission authority to establish terms under which the commission may
suspend or revoke a power generation company's or an aggregator's registration;
and §39.357, which grants the commission authority to impose an administrative
penalty for violations of §39.356.
Cross Reference to Statutes: Public Utility Regulatory Act §§14.002,
15.023, 15.024, 39.351, 39.353, 39.354, 39.3545, 39.356, and 39.357.
§25.109.Registration of Power Generation Companies and Self-Generators.
(a)
Application.
(1)
A person that owns an electric generating facility in Texas
and is either a power generation company (PGC), as defined in §25.5 of
this title (relating to Definitions), or a qualifying facility (QF) as defined
in §25.5 of this title, and generates electricity intended to be sold
at wholesale, must register as a PGC.
(2)
A person that owns an electric generating facility rated
at one megawatt (MW) or more, but is not a PGC, must register as a self-generator.
A QF that does not sell electricity or provides electricity only to the purchaser
of the facility's thermal output must register as a self-generator.
(3)
A person that owned such generating facility prior to September
1, 2000 shall register after September 1, 2000 and before January 1, 2001.
A person that becomes subject to this section after September 1, 2000 must
register on or before the first date of generating electricity.
(b)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context indicates
otherwise.
(1)
Generating facility - All generating units located at,
or providing power to the electricity-consuming equipment at an entire facility
or location.
(2)
Nameplate rating - The full-load continuous rating of a
generator under specified conditions as designated by the manufacturer.
(3)
Net dependable capability - The maximum load in megawatts,
net of station use, which a generating unit or generating station can carry
under specified conditions for a given period of time, without exceeding approved
limits of temperature and stress.
(4)
Person - Includes an individual, a partnership of two or
more persons having a joint or common interest, a mutual or cooperative association,
and a corporation, but does not include an electric cooperative.
(c)
Capacity ratings. For purposes of this section, the capacity
of generating units shall be reported as follows:
(1)
Renewable resource generating units shall be rated at the
nameplate rating;
(2)
All other generating units having a nameplate rating of
ten MW or less shall be rated at the nameplate rating; and
(3)
All other generating units having a nameplate rating greater
than ten MW shall be rated at the summer net dependable capability. Self-generation
units that are not required to calculate net dependable capability by the
reliability council in which they operate or by the independent organization
for the power region in which they operate shall be rated at the nameplate
rating.
(d)
Registration requirements for self-generators. To register
as a self-generator, a person shall provide the following information:
(1)
The legal name of the registering party.
(2)
The Texas business address and principal place of business
of the registering party.
(3)
The name, title, address, telephone number, facsimile transmission
number, and e-mail address of the person to whom communications relating to
the self-generator should be addressed.
(4)
For each generating facility that is located in the state,
the following information:
(A)
Name;
(B)
Location by county, utility service area, control area,
power region, and reliability council; and
(C)
Capacity rating in megawatts.
(e)
Registration requirements for power generation companies.
To register as a PGC, a person shall provide the following information:
(1)
The legal name of the registering party as well as any
trade or commercial name(s) under which the registering party intends to operate.
(2)
The registering party's Texas business address and principal
place of business.
(3)
The name, title, address, telephone number, facsimile transmission
number, and e-mail address of the person to whom communications should be
addressed.
(4)
The names and types of business of the registering party's
corporate parent companies, along with percentages of ownership.
(5)
A description of the types of services provided by the
registering party that pertain to the generation of electricity.
(6)
The name and corporate relationship of each affiliate that
buys and sells electricity at wholesale in Texas, sells electricity at retail
in Texas, or is an electric or municipally owned utility in Texas.
(7)
For each generating facility that is located in the state,
the following information:
(A)
Name;
(B)
Location by county, utility service area, control area,
power region, and reliability council; and
(C)
Capacity rating in megawatts.
(8)
For any application filed with the Federal Energy Regulatory
Commission (FERC) after the effective date of this section, copies of any
information, excluding responses to interrogatories, that was filed in connection
with the FERC registration, and any order issued by the FERC pursuant thereto.
Such registrations shall include, for example, determination of exempt wholesale
generator (EWG) or QF status.
(9)
An affidavit by an authorized person attesting that the
registering party:
(A)
Generates electricity that is intended to be sold at wholesale;
(B)
Does not own a transmission or distribution facility in
this state other than an essential interconnecting facility, a facility not
dedicated to public use, or a facility otherwise excluded from the definition
of "electric utility" under §25.5 of this title; and
(C)
Does not have a certificated service area.
(f)
Registration procedures. The following procedures apply
to the registration of PGCs and self-generators.
(1)
Registration shall be made by completing the form approved
by the commission, which shall be verified by oath or affirmation and signed
by an owner, partner, or officer of the registering party. Registration forms
may be obtained from the Central Records division of the Public Utility Commission
of Texas during normal business hours, or from the commission's Internet site.
Each registering party shall file its registration form with the commission's
Filing Clerk in accordance with the commission's procedural rules, Chapter
22 of this title, Subchapter E (relating to Pleadings and Other Documents).
(2)
The commission staff shall review the submitted form for
completeness. Within 15 business days of receipt of an incomplete form, the
commission staff shall notify the registering party in writing of the deficiencies
in the request. The registering party shall have ten business days from the
issuance of the notification to cure the deficiencies. If the deficiencies
are not cured within ten business days, the staff will notify the registering
party that the registration request is rejected without prejudice.
(3)
The registering party may designate answers or documents
that it believes to contain proprietary or confidential information. Information
designated as proprietary or confidential will be treated in accordance with
the standard protective order issued by the commission applicable to registration
information for PGCs and self-generators.
(g)
Post-registration requirements for self-generators. Self-generators
shall report any material change during the preceding year in the information
provided on the registration form by February 28 of each year.
(h)
Post-registration requirements for power generation companies.
PGCs shall report any material change in the information provided on the registration
form within 45 days of the change. A material change would include, for example,
a merger or consolidation with another owner of electric generation facilities
that offers electricity for sale in this state. PGCs shall comply with the
reporting requirements of the commission's rules implementing the Public Utility
Regulatory Act (PURA) §39.155(a).
(i)
Suspension and revocation of power generation company registration
and administrative penalty. Pursuant to PURA §39.356, registrations of
PGCs pursuant to this section are subject to suspension and revocation for
significant violations of PURA or rules adopted by the commission. The commission
may also impose an administrative penalty for a significant violation at its
discretion. Significant violations may include the following:
(1)
Failure to comply with the reliability standards and operational
criteria duly established by the independent organization that is certified
by the commission;
(2)
For a PGC operating in the Electric Reliability Council
of Texas (ERCOT), failure to observe all scheduling, operating, planning,
reliability, and settlement policies, rules, guidelines, and procedures established
by the independent system operator in ERCOT;
(3)
Providing false or misleading information to the commission;
(4)
Engaging in fraudulent, unfair, misleading, deceptive or
anti-competitive practices;
(5)
A pattern of failure to meet the conditions of this section,
other commission rules, regulations or orders;
(6)
Suspension or revocation of a registration, certification,
or license by any state or federal authority;
(7)
Failure to operate within the applicable legal parameters
established by PURA §39.351; and
(8)
Failure to respond to commission inquiries or customer
complaints in a timely fashion.
§25.111.Registration of Aggregators.
(a)
Application. Any person, municipality, political subdivision,
or political subdivision corporation that aggregates the loads of two or more
electric service customers for purposes of purchasing electricity services
shall register with the Public Utility Commission of Texas (commission) pursuant
to this section. A single electricity customer, including a municipality or
political subdivision, negotiating service in multiple locations for its own
use, does not need to register with the commission.
(b)
Purpose statement. The role of an aggregator in the restructured
electric market is to be a buyer's agent for customer groups. An entity that
joins customers together as a single purchasing unit and negotiates on their
behalf for the purchase of electricity service in Texas is considered an aggregator
and must register pursuant to this section. In contrast, an entity that sells
electricity is a retail electric provider (REP) and is subject to other commission
rules. This section sets out conditions for registering and operating as an
aggregator, including the condition that the aggregator, a buyer's agent,
may not be affiliated with a REP or other seller's agent representing the
REP.
(c)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context indicates
otherwise:
(1)
Aggregation - to join two or more electricity customers
into a purchasing unit to negotiate the purchase of electricity by the electricity
customer as part of a voluntary association of electricity customers, provided
that an electricity customer may not avoid any non-bypassable charges or fees
as a result of aggregating its load.
(2)
Aggregator - An entity is an aggregator, as opposed to
a consultant, if it conducts any activity that joins two or more customers
into a purchasing unit to negotiate the purchase of electricity from retail
electric providers (REPs). If an entity conducts activities only in the capacity
of advisor to a customer or set of customers, without contact with REPs specific
to that customer or customer group, then it is a consultant that does not
need to register pursuant to this section. An aggregator that provides aggregation
services to Texas electricity customers must meet one of the following definitions:
(A)
Class I aggregator - a person joining two or more customers,
other than municipalities and political subdivision corporations, into a single
purchasing unit to negotiate the purchase of electricity from REPs.
(B)
Class II aggregator - a person or municipality or other
political subdivision that provides aggregation services to municipalities
or other political subdivisions in the manner stated below:
(i)
A person authorized by two or more municipal governing
bodies to join the bodies into a single purchasing unit to negotiate the purchase
of electricity from REPs or a municipality aggregating under Local Government
Code, Chapter 303.
(ii)
A person or political subdivision corporation authorized
by two or more political subdivision governing bodies to join the bodies into
a single purchasing unit or multiple purchasing units to negotiate the purchase
of electricity from REPs for the facilities of the aggregated political subdivisions
or a person or political subdivision aggregating under Local Government Code,
Chapter 303.
(3)
Person - an individual, a partnership of two or more persons
having a joint or common interest, a mutual or cooperative association, or
a corporation, but not including a municipal corporation or an electric cooperative.
For purposes of this section, a political subdivision or political subdivision
corporation is not a person.
(4)
Political subdivision - a county, municipality, hospital
district, or any other political subdivision receiving electric service from
an entity that has implemented customer choice.
(5)
Political subdivision corporation - an entity consisting
of two or more political subdivisions created to act as an agent, or otherwise,
to negotiate the purchase of electricity for the use of the respective public
facilities in accordance with Local Government Code §303.001.
(6)
Proprietary customer information - any information compiled
by an aggregator on a customer in the normal course of aggregating electric
service that makes possible the identification of any individual customer
by matching such information with the customer's name, address, account number,
type or classification of service, historical electricity usage, expected
patterns of use, types of facilities used in providing service, individual
contract terms and conditions, price, current charges, billing records, or
any other information that the customer has expressly requested not be disclosed.
Information that is redacted or organized in such a way as to make it impossible
to identify the customer to whom the information relates does not constitute
propriety customer information.
(7)
Revocation - the cessation of all aggregation business
operations in the state of Texas, pursuant to commission order.
(8)
Suspension - the cessation of all aggregation business
operations in the state of Texas associated with obtaining new customers,
pursuant to commission order.
(d)
Types of aggregator registrations required.
(1)
Entities seeking to aggregate electricity customers may
not provide aggregation services in the state unless they have registered
with the commission. Such registration may be sought after September 1, 2000.
(2)
There are two types of registration available to aggregators.
An entity seeking to aggregate under the terms and conditions set forth in
the Public Utility Regulatory Act (PURA) §39.353 shall register as a
"Class I aggregator." An entity seeking to aggregate under the terms and conditions
set forth in PURA §39.354 or §39.3545, or both, shall register as
a "Class II aggregator." The Class II category of registration has four subclasses,
A through D. The terms of eligibility and operational requirements for each
type of aggregator are specified in paragraphs (3) and (4) of this subsection.
The registering party must indicate the Class and subclass, if any, under
which it wishes to register. If a person is eligible and wishes to perform
aggregation services under more than one class of registration, it shall obtain
all applicable registrations.
(3)
Registration of Class I aggregators. A Class I aggregator
may join at least two voluntary customers into a single purchasing unit to
negotiate the purchase of electricity from REPs. A Class I aggregator shall:
(A)
be a person and not a REP;
(B)
not be an affiliate of a REP;
(C)
not include municipalities, political subdivisions, or
political subdivision corporations among the customers of an aggregation;
(D)
not take title to electricity, and not accept any money
associated with payment or prepayment for electric service, as distinguished
from aggregation services, unless it does so under contract with a REP, consistent
with any rules adopted by the commission relating to customer billing as an
independent billing agent for a REP;
(E)
comply with the customer protection rules, disclosure requirements,
and marketing guidelines of PURA and this title;
(F)
comply with any other terms and conditions established
by the commission to regulate reliability and integrity of aggregators.
(4)
Registration of Class II aggregators. A Class II aggregator
shall not be a REP or an affiliate of a REP and shall register pursuant to
at least one of the following sets of eligibility and operational requirements:
(A)
Class II.A: Person that aggregates municipalities, political
subdivisions, or both. A person registered as a Class II.A aggregator pursuant
to this subparagraph may join two or more authorizing municipal governing
bodies into a single purchasing unit to negotiate the purchase of electricity
from REPs, or it may join two or more authorizing political subdivision governing
bodies, including municipal governing bodies, into single or multiple purchasing
units to negotiate the purchase of electricity from REPs for the facilities
of the aggregated political subdivisions. A person aggregating political subdivisions
pursuant to this subparagraph may not take title to electricity. The authorizations
shall be written and may specify the buyer's agent role of the aggregator
to the extent desired by the political subdivision.
(B)
Class II.B: Political subdivision corporation aggregating
political subdivisions. A political subdivision corporation registered as
a Class II.B aggregator pursuant to this subparagraph may join two or more
authorizing political subdivision governing bodies, including municipal governing
bodies, into single or multiple purchasing units to negotiate the purchase
of electricity from REPs for the facilities of the aggregated political subdivisions.
A political subdivision corporation aggregating political subdivisions pursuant
to this subparagraph may take title to electricity.
(C)
Class II.C: Public body that aggregates its citizens. A
municipality or other political subdivision registered as a Class II.C aggregator
pursuant to this subparagraph may negotiate for the purchase of electricity
and energy services on behalf of each affirmatively requesting citizen of
the municipality in accordance with Local Government Code §303.002, with
the option to contract with a third party or another aggregator for the administration
of the aggregation of the purchased services. An affirmatively requesting
citizen is a resident of the political subdivision who voluntarily agrees
to participate in the aggregation by a means that may be verified after the
fact. If the Class II.C aggregator contracts for the administration function
with a third party that is a person, other than its own employee, the person
must be a registered Class II.D aggregator.
(D)
Class II.D: Administrator of citizen aggregation. A person
registered as a Class II.D aggregator pursuant to this subparagraph may administer
the aggregation of electricity and energy services purchased for each requesting
citizen of a municipality or other political subdivision in accordance with
Local Government Code §303.002 pursuant to a contract with the municipality
or political subdivision. An affirmatively requesting citizen is a resident
of the political subdivision who voluntarily agrees to participate in the
aggregation by a means that may be verified after the fact. A Class II.D aggregator
must have verifiable authorization from the political subdivision to administer
its citizen aggregation program. The authorization shall be written and may
include conditions on the administrator's transactions with its affiliated
REP, if any, when so specified by the political subdivision. The Class II.D
registration authorizes its holder to administer a citizen aggregation program
on behalf of the political subdivision but does not authorize its holder to
negotiate for the purchase of electricity and energy services on behalf of
the citizens of the political subdivision. An administrator of citizen aggregation
must register pursuant to this subparagraph when the administrator meets the
definition of "person" under this section, except when the administrator is
an individual employed by the political subdivision conducting citizen aggregation
pursuant to Local Government Code §303.002. A Class II.D aggregator may
not take title to electricity and may not be a REP or an affiliate of a REP.
(e)
Requirements for public bodies seeking to register as Class
II.B or II.C aggregators. A municipality, other political subdivision, or
political subdivision corporation seeking to register and operate as a Class
II.B or Class II.C aggregator in accordance with this section shall provide
the following information on a registration form approved by the commission.
This subsection does not apply to registering parties who are persons, as
defined in this section.
(1)
The legal name of the registering party as well as any
trade or commercial name(s) under which the registering party intends to operate;
(2)
The registering party's Texas business address and principal
place of business;
(3)
The names and business addresses of the registering party's
principal officers;
(4)
The names of the registering party's affiliates and subsidiaries,
if applicable;
(5)
Telephone number of the customer service department or
the name, title and telephone number of the customer service contact person;
(6)
Name, physical business address, telephone number, fax
number, and e-mail address for a regulatory contact person and for an agent
for service of process, if a different person;
(7)
The types of electricity customers that the registering
party intends to aggregate; and
(8)
Any other information required of public bodies on a registration
form approved by the commission.
(f)
Requirements for persons seeking to register as a Class
I or Class II.A or Class II.D aggregator. A person seeking any registration
under this section shall provide evidence of competency and experience in
providing the scope and nature of its proposed services by providing the information
listed in either paragraph (1) or (2) of this subsection on a registration
form approved by the commission. This subsection does not apply to registering
parties who are municipalities, other political subdivisions, or political
subdivision corporations.
(1)
Standard registration.
(A)
The legal name(s) of the registering party. A registering
party may operate under a maximum of five trade or commercial names. At the
time of registration, the registering party shall provide all names to the
commission and an explanation of its plan for disclosing the names to its
customers;
(B)
The Texas business address and principal place of business
of the registering party;
(C)
The name, title, business address, and phone number of
each of the registering party's directors, officers, or partners;
(D)
Address and telephone number for the customer or member
service department or the name, title and telephone number of the customer
service contact person;
(E)
Name, physical business address, telephone number, fax
number, and e-mail address for a Texas regulatory contact person and for an
agent for service of process, if a different person;
(F)
The types of electricity customers that the registering
party intends to aggregate;
(G)
Applicable information on file with the Texas Secretary
of State, including, but not limited to, the registering party's endorsed
certificate of incorporation certified by the Texas Secretary of State, a
copy of the registering party's certificate of good standing, or other business
registration on file with the Texas Secretary of State;
(H)
Disclosure of delinquency with taxing authorities in the
state of Texas;
(I)
A description of prior experience, if any, of the registering
party or one or more of the registering party's principals or employees in
the retail electric industry or a related industry;
(J)
The names of the affiliates and subsidiaries, if any, of
the registering party that provide utility-related services, such as telecommunications,
electric, gas, water or cable service;
(K)
Disclosure of any affiliate or agency relationships and
the nature of any affiliate or agency agreements with REPs or transmission
and distribution utilities, and an explanation of plans for disclosure to
customers and REPs with whom it does business, of its agency relationships
with REPs;
(L)
A list of other states, if any, in which the registering
party and registering party's affiliates and subsidiaries that provide utility-
related services, such as telecommunications, electric, gas, water, or cable
service, currently conduct or previously conducted business;
(M)
Disclosure of the registering party's known or anticipated
sources of compensation for aggregation services, and an explanation of plans
for disclosure to its customers of the sources of compensation for aggregation
services;
(N)
Disclosure of the history of bankruptcy or liquidation
proceedings of the registering party or any predecessors in interest in the
three calendar years immediately preceding the registration request;
(O)
Disclosure of whether the registering party, a predecessor,
an officer, director or principal has been convicted or found liable for fraud,
theft or larceny, deceit, or violations of any customer protection or deceptive
trade laws in any state;
(P)
A statement indicating whether the registering party is
currently under investigation, either in this state or in another state or
jurisdiction for violation of any customer protection law or regulation;
(Q)
The following information regarding the registering party's
complaint history during the three years preceding the application:
(i)
Any complaint history regarding the registering party,
registering party's affiliates or subsidiaries that provide utility-related
services, such as telecommunications, electric, gas, water, or cable service,
the registering party's predecessors in interest, and principals with public
utility commissions or public service commissions in other states where the
registering party is doing business or has done business in the past. Relevant
information shall include, but not be limited to, the number of complaints,
the type of complaint, status of complaint, resolution of complaint and the
number of customers in each state where complaints occurred. The Office of
Customer Protection shall provide similar complaint information on file at
the commission for review.
(ii)
Any complaint history regarding the registering party,
registering party's affiliates or subsidiaries that provide utility-related
services, such as telecommunications, electric, gas, water or cable service,
the registering party's predecessors in interest, and principals on file with
the Texas Secretary of State, Texas Comptroller's Office, Office of the Texas
Attorney General, and the Attorney General in other states where the registering
party is doing business.
(R)
For a person registering as a Class II.A aggregator, pending
authorizations, if any, from public entities for the registering party to
aggregate their loads.
(S)
Any other information required of persons on a registration
form approved by the commission.
(2)
Alternative limited registration. A person seeking registration
pursuant to this paragraph may aggregate only customers who seek to contract
for 250 kilowatts or more, per customer, of peak demand electricity. Requirements
for registration under this paragraph are as follows:
(A)
The person shall provide the commission a signed, notarized
affidavit stating that it possesses a written consent from each customer it
wishes to serve, authorizing the person to provide aggregation services for
that customer;
(B)
The person shall complete applicable portions of the registration
form other than the information prescribed in paragraph (1)(J), (K), (L),
(M) and (Q) of this subsection;
(C)
The person shall meet financial requirements of this section,
if applicable;
(D)
A person registering on the basis of this paragraph is
subject to the applicable post-registration requirements of subsection (i)
of this section.
(g)
Financial requirements for certain persons. A person registering
under this section who intends to take any deposits or other advance payments
from electricity customers for aggregation services, as distinguished from
electric services, shall demonstrate financial resources necessary to protect
customers from the loss of deposits or other advance payments through fraud,
business failure or other causes. Aggregation services are distinct from retail
electric services. A person registered initially on the basis of not accepting
customer deposits or other advance payments for aggregation services shall
amend its registration with a showing to the commission that it is able to
comply with the requirements of this subsection in advance of accepting deposits
or other advance payments for aggregation services.
(1)
Standard financial qualifications. The amount of required
financial resources shall equal the registering person's cumulative obligations
to customers arising from deposits or other advance payments for aggregation
services made by customers prior to the delivery of aggregation services.
A person registering under this paragraph shall disclose its methodology for
calculating required financial resources on the registration form.
(A)
Financial evidence. A aggregator may use any of the financial
instruments listed below, as well as any other financial instruments approved
in advance by the commission, in order to satisfy the financial requirements
established by this rule.
(i)
Cash or cash equivalent, including cashier's check or sight
draft;
(ii)
A certificate of deposit with a bank or other financial
institution;
(iii)
A letter of credit issued by a bank or other financial
institution, irrevocable for a period of at least 15 months;
(iv)
A line of credit or other loan issued by a bank or other
financial institution, including a bond in a form approved by the commission,
irrevocable for a period of at least 15 months;
(v)
A loan issued by a subsidiary or affiliate of the applicant
or a corporation holding controlling interest in the applicant, irrevocable
for a period of at least 15 months;
(vi)
A guaranty issued by a shareholder or principal of the
applicant; a subsidiary or affiliate of the applicant or a corporation holding
controlling interest in the applicant irrevocable for period of at least 15
months.
(B)
Loans or guarantees. To the extent that it relies upon
a loan or guaranty described in subparagraph (A)(v) or (vi) of this paragraph,
the aggregator shall provide financial evidence sufficient to demonstrate
that the lender or guarantor possesses the financial resources needed to fund
the loan or guaranty.
(C)
Unencumbered resources. All cash and other instruments
listed in subparagraph (A) of this paragraph as evidence of financial resources
shall be unencumbered by pledges for collateral. These financial resources
shall be subject to verification and review prior to registration of the aggregator
and at any time after registration in which the aggregator relies on the cash
or other financial instrument to meet the requirements under this subsection.
The resources available to the aggregator must be authenticated by independent,
third party documentation.
(D)
Credit ratings. To meet the requirements of this paragraph,
a aggregator may rely upon either its own investment grade credit rating,
or a bond, guaranty, or corporate commitment of an affiliate or another company,
if the entity providing such security is also rated investment grade. The
determination of such investment grade quality will be based on the ratings
of either Standard & Poors (S&P) or Moody's Investor Services (Moody's).
If the investment grade credit rating of either S&P or Moody's is suspended
or withdrawn, the REP must provide alternative financial evidence consistent
with this paragraph within ten days of the credit downgrade.
(E)
Disclosure to financial backers. A person registering under
this paragraph shall provide evidence that a copy of this rule has been provided
to any party providing, either directly or indirectly, financial resources
necessary to protect customers pursuant to this paragraph.
(F)
Ongoing Responsibilities. A person registering under this
paragraph is subject to the ongoing financial requirements and other applicable
post-registration requirements of subsection (i) of this section.
(2)
Alternative financial qualifications for limited registration.
A person seeking registration pursuant to this paragraph is limited to aggregating
only customers who seek to contract for 250 kilowatts or more, per customer,
of peak demand electricity. Requirements for registration on this limited
basis are as follows:
(A)
The person shall provide the commission a signed, notarized
affidavit indicating that it has a written consent from each customer it wishes
to serve, stating that the customer is satisfied that the aggregator can provide
aggregation services without establishing the cash and credit resources prescribed
in paragraph (1) of this subsection.
(B)
The person shall complete portions of the registration
request form other than the information prescribed in paragraph (1) of this
subsection;
(C)
A person registering on the basis of this paragraph is
subject to the applicable post-registration requirements of subsection (i)
of this section.
(h)
Registration procedures. The following procedures apply
to all entities seeking to register pursuant to this section:
(1)
A registration request shall be made on the form approved
by the commission, verified by oath or affirmation, and signed by a registering
party owner or partner, or an officer of the registering party. The form may
be obtained from the Central Records division of the commission or from the
commission's Internet site. Each registering party shall file its form to
request registration with the commission's Filing Clerk in accordance with
the commission's procedural rules, Chapter 22 of this title, Subchapter E
(relating to Pleadings and Other Documents).
(2)
The registering party may identify certain information
or documents submitted that it believes to contain proprietary or confidential
information. Registering parties may not designate the entire registration
request as confidential. Information designated as proprietary or confidential
will be treated in accordance with the standard protective order issued by
the commission applicable to requests to register as an aggregator. If and
when a public information request is received for information designated as
confidential, the registering party has the burden of establishing that information
filed pursuant to this rule is proprietary or confidential.
(3)
An application shall be processed as follows:
(A)
The registering party shall immediately inform the commission
of any material change in the information provided in the registration request
while the request is pending.
(B)
The commission staff shall review the submitted form for
completeness. Within 15 business days of receipt of an incomplete request,
the commission staff shall notify the registering party in writing of the
deficiencies in the request. The registering party shall have ten business
days from the issuance of the notification to cure the deficiencies. If the
deficiencies are not cured within ten business days, the staff will notify
the registering party that the registration request is rejected without prejudice.
(C)
Based upon the information provided pursuant to subsections
(e), (f), and (g) of this section, the commission shall determine whether
a registering party is capable of fulfilling customer protection provisions,
disclosure requirements, and marketing guidelines of PURA.
(D)
The commission shall determine whether to accept or reject
the registration request within 60 days of the receipt of a complete application.
Unacceptable registrations will be rejected without prejudice to refiling.
(i)
Post-registration requirements.
(1)
An aggregator may not refuse to provide aggregation services
or otherwise discriminate in the provision of aggregation services to any
customer because of race, creed, color, national origin, ancestry, sex, marital
status, source or level of income, disability, or familial status; or refuse
to provide aggregation services to a customer because the customer is located
in an economically distressed geographic area or qualifies for low-income
affordability or energy efficiency services; or otherwise unreasonably discriminate
on the basis of the geographic location of a customer.
(2)
An aggregator shall comply with the commission's education,
disclosure, and marketing guidelines and rules, including those pertaining
to customer protection and the filing of regular reports on customer complaints.
An aggregator may not release proprietary customer information to any person
unless the customer authorizes the release in a manner approved by the commission.
An aggregator shall disclose to customers, when a customer requests aggregation
services, all of its trade or commercial names, any agency relationships with
REPs, and its sources of compensation for the provision of aggregation services.
(3)
An aggregator shall update any changes to business name,
address, or phone number within ten business days from the date of the change.
(4)
An aggregator shall notify the commission within 30 days
of any material change to its registration request, or if the registrant ceases
to meet any commission requirements.
(5)
An aggregator may amend its registration by providing only
the information relevant to the amendment on the registration form. The amendment
shall be submitted pursuant to subsection (h)(1) of this section.
(6)
An aggregator shall file an annual report with the commission
on September 1 of each year on a form approved by the commission.
(7)
An aggregator that is required to demonstrate financial
qualifications specified in subsection (g)(1) of this section are subject
to the following ongoing conditions:
(A)
The aggregator shall maintain records on an on-going basis
for any advance payments received from customers. Financial resources required
under subsection (g)(1)(A) - (C) of this section, shall be maintained at levels
sufficient to demonstrate that the registrant can cover all advanced payments
that are outstanding at any given time.
(B)
The aggregator shall file a sworn affidavit demonstrating
compliance with subsection (g)(1)(A) - (D) of this section within 90 days
of receiving the first payment for aggregation services before those services
are rendered.
(C)
Financial obligations to customers shall be payable to
them within 30 business days from the date the aggregator notifies the commission
that it intends to withdraw its registration or is deemed by the commission
not able to meet its current customer obligations. Customer payment obligations
shall be settled before registration is withdrawn.
(D)
Financial resources required pursuant to subsection (g)(1)
of this section shall not be reduced by the aggregator without the advance
approval of the commission.
(E)
The annual update required by paragraph (6) of this subsection
shall include a sworn affidavit attesting to compliance with subsection (g)(1)
of this section, and an explanation of the methodology for that compliance.
(F)
The aggregator shall maintain records on an ongoing basis
of authorizations from the public entities that have authorized it to provide
aggregation services.
(8)
A person that initially received its registration on the
basis of not accepting payments for aggregation services, and was therefore
not subject to subsection (g) of this section, shall amend its registration
with a showing to the commission that it is able to comply with the requirements
of subsection (g) of this section in advance of accepting payments.
(9)
Persons registered pursuant to the alternative requirements
for limited registration specified in subsections (f)(2) and (g)(2) of this
section shall make available to the commission the written consent of individual
customers, if requested.
(10)
A registered aggregator that ceases to provide aggregation
services may withdraw its registration by notifying the commission 30 days
prior to ceasing operations and providing proof of refund of any monies owed
to customers. An aggregator that withdraws its registration is not required
to comply with paragraphs (1) - (9) of this subsection, following such a withdrawal.
(11)
A registration shall not be transferred without prior
commission approval. The transferee shall submit an application for registration
in accordance with this section. The commission shall determine whether to
approve the transfer within 60 days of the receipt of a complete application
submitted in accordance with subsection (h) of this section.
(j)
Suspension and revocation of registration and administrative
penalty. Pursuant to PURA §39.356, registrations granted pursuant to
this section are subject to suspension and revocation for significant violations
of PURA or other rules adopted by the commission. At its discretion, the commission
may also impose an administrative penalty for a significant violation. Significant
violations include, but are not limited to, the following:
(1)
providing false or misleading information to the commission;
(2)
engaging in fraudulent, unfair, misleading, deceptive or
anti-competitive practices;
(3)
failing to maintain the minimum level of financial resources
required under subsection (g)(1) of this section, if applicable;
(4)
a pattern of failure to meet the conditions of this section,
other commission rules, or orders;
(5)
bankruptcy, insolvency, or failure to meet its financial
obligations on a timely basis;
(6)
suspension or revocation of a registration, certification,
or license by any state or federal authority;
(7)
conviction of a felony by the registrant or a principal
or officer employed by the registrant, of any crime involving fraud, theft
or deceit related to the registrant's aggregation service;
(8)
failure to operate within the applicable legal parameters
established by PURA §§39.353, 39.354, 39.3545, and Local Government
Code Chapter 303;
(9)
failure to respond to commission inquiries or customer
complaints in a timely fashion;
(10)
switching or causing to be switched the REP of a customer
without first obtaining the customer's authorization; or
(11)
billing an unauthorized charge, or causing an unauthorized
charge to be billed to a customer's retail electric service bill.
(k)
Sunset of affiliate limitation. The provisions of this
section that speak to a prohibition on aggregators from affiliating with REPs
cease to be effective July 1, 2003. When this occurs, the agency disclosures
required in subsections (f)(1)(K) and (i)(2) of this section shall also include
a requirement to disclose any affiliate relationships between the aggregator
and REPs.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on June 8, 2000.
TRD-200004032
Rhonda Dempsey
Rules Coordinator
Public utility Commission
Effective date: June 28, 2000
Proposal publication date: March 17, 2000
For further information, please call: (512) 936-7308
Subchapter D. RECORDS, REPORTS, AND OTHER REQUIRED INFORMATION
16 TAC §26.100
The Public Utility Commission of Texas (commission) adopts
the repeal of §26.100 relating to Other Records, Reports, and Information
that May be Required with no changes to the text as published in the March
17, 2000,
Texas Register
(25 TexReg 2248).
This section is not necessary as the information is provided as an appendix
to the commission's substantive rules in Chapter 26. This appendix provides
more accurate information as a result of frequent updates without the restrictions
of a rulemaking proceeding. The appendix is available through the commission's
Central Records and on the commission's web site. This repeal is adopted under
Project Number 22047.
The commission received no comments on the proposed repeal.
This repeal is adopted under the Public Utility Regulatory Act,
Texas Utilities Code Annotated §14.002 (Vernon 1998) (PURA) which provides
the commission with the authority to make and enforce rules reasonably required
in the exercise of its powers and jurisdiction.
Cross Reference to Statutes: Public Utility Regulatory Act §14.002.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on June 8, 2000.
TRD-200004035
Rhonda Dempsey
Rules Coordinator
Public Utility Commission
Effective date: June 28, 2000
Proposal publication date: March 17, 2000
For further information, please call: (512) 936-7308
Chapter 68.
ARCHITECTURAL BARRIERS
Subchapter E. CERTIFICATION, LICENSING AND REGULATION
Chapter 26.
SUBSTANTIVE RULES APPLICABLE TO TELECOMMUNICATIONS SERVICE PROVIDERS
Part 4.
TEXAS DEPARTMENT OF LICENSING AND REGULATION