PART 2. PUBLIC UTILITY COMMISSION OF TEXAS

CHAPTEr 25. SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS

The Public Utility Commission of Texas (commission) adopts amendments to the Tariff for Retail Delivery Service, §25.214, relating to Terms and Conditions of Retail Delivery Service Provided by Investor Owned Transmission and Distribution Utilities, and amendments to §25.474, relating to Selection of Retail Electric Provider with changes to the proposed text as published in the February 13, 2009, issue of the Texas Register (34 TexReg 920). The amendments will facilitate more rapid transfers from one retail electric provider (REP) to another when a customer decides to switch retail providers. Under current rules, switching REPs can take as long as 45 calendar days; these amendments will shorten that time to seven business days or less. The amendments will modify the switch notification sent to the customer by the registration agent upon receipt of a switch request from a REP, and will require transmission and distribution utilities (TDUs) to process meter reads for customers who are switching REPs within four business days of receiving a request. The amendments will also require REPs to request switches consistent with the customer's requested switch date. The commission has adopted new §25.475, relating to General Retail Electric Provider (REP) Requirements and Information Disclosures to Residential and Small Commercial Customers, that requires REPs to notify customers of the termination of a term contract for electric service at least 14 days before the termination date. The changes in this rulemaking and §25.475 will require the registration agent, TDUs, and REPs to implement a shorter switching timeline and allow customers to be served by their chosen provider more quickly. This rule is a competition rule subject to judicial review as specified in PURA §39.001(e). Project Number 36536 is assigned to this proceeding.

In its Proposal for Publication, Staff noted that a public hearing would be held if requested. As no request for a hearing was received, none was held.

The commission received initial comments on the proposed amendments from the following: Accent Energy, Amigo Energy, Cirro Energy, Green Mountain Energy, Hudson Energy, U.S. Energy Savings, StarTex Power, Stream Energy, Tara Energy, and Tri-Eagle Energy, collectively as the Texas Electric Association of Marketers (TEAM); AEP Texas Central Company, AEP Texas North Company, CenterPoint Energy Houston Electric, LLC, and Texas-New Mexico Power Company (Joint TDUs, collectively); Direct Energy, LP, Gexa Energy, LP, Green Mountain Energy Company, Sempra Energy Solutions, LLC, and Stream Energy, collectively as the Association of Retail Marketers (ARM); the Electric Reliability of Texas (ERCOT); Office of Public Utility Counsel (OPC); Oncor Electric Delivery Company, LLC (Oncor); Reliant Retail Services, LLC (Reliant); Steering Committee of Cities Served by Oncor (Cities); Texas Ratepayers Organization to Save Energy and Texas Legal Services (Texas ROSE/TLSC, collectively); the Texas Industrial Energy Consumers (TIEC); and TXU Energy Retail Company, LLC (TXU Energy).

The commission received reply comments from Joint TDUs; OPC; ERCOT; ARM, CPL Retail Energy, Reliant, TEAM, TXU Energy, and WTU Retail Energy (REP Coalition, collectively); Oncor; TIEC; Cities; Texas ROSE/TLSC; and ARM, CPL Retail Energy, Direct Energy, TEAM, TXU Energy, and WTU Retail Energy (Retail Electric Companies, collectively).

The commission received supplemental comments from CenterPoint Energy Houston Electric, LLC (CenterPoint); CPL Retail Energy, Direct Energy, Gexa Energy, Green Mountain Energy, Reliant Energy, First Choice Power, Stream Energy, TXU Energy Retail Company, TLC and WTU Retail Energy (Retail Electric Companies, collectively).

The commission received replies to supplemental comments from AEP Texas Central Company and AEP Texas North Company (jointly, AEP Texas); and CenterPoint.

In addition to comments on the proposed amendments, the commission requested interested persons to file comments in response to the following questions:

1. What additional customer protections need to be added to PUC rules to address the removal of the "ERCOT postcard"?

Texas ROSE/TLSC supported retention of the ERCOT postcard notification process as a safeguard against slamming. They stated that elimination of the postcard would encourage more slamming, complicate resolution of slamming problems for customers, and result in an increase in slamming complaints filed at the commission. They referred to an alternative postcard that was discussed at a February 24, 2009 meeting with commission, OPC, and ERCOT staffs. As discussed at that meeting, the existing postcard message would be modified to simply inform the customer that an order has been placed to switch the customer's service to a new REP. The customer would be directed to call the REP receiving the new account if the customer did not authorize the switch. Texas ROSE/TLSC preferred the current arrangement in which the customer is given a telephone number to initiate an automatic cancellation process, saying this arrangement offered the highest protection against slamming. But they also noted that the alternative postcard notification still provided the customer notice of the switch prior to receipt of an invoice from the new REP. They further noted that this arrangement should help simplify slamming complaint resolution at the commission. Texas ROSE/TLSC further recommended that within twelve months: (1) customers be directed to a toll-free telephone number that would automatically notify one or both REPs of the customer's contact; (2) REP customer service lines have a touch-tone selectable option to connect to trained, dedicated staff for handling switch cancellations; (3) REPs be required to notify ERCOT pursuant to §25.495(a)(1) within two business hours; (4) REPs be required to inform customers of their right to rescind a switch while it is being processed and of their right to complain to the commission if a rescission request is not readily carried out by the REP; (5) ERCOT protocols be retained and developed to ensure that all switches in process are honored during mass transitions; (6) discretionary service fee language be modified to make it clear that fees will be charged only when it is necessary to send a technician to read the meter; and (7) discretionary service fees for meter reads for expedited switches be charged by the TDU to the customer requesting the service.

In reply comments, Cities said that while they oppose elimination of the current ERCOT notification process, if the alternative postcard is adopted they concurred with Texas ROSE/TLSC regarding a toll-free telephone number to automatically alert REPs of a customer's wish to cancel a switch and a requirement for quick action by REPs to cancel the switch, at the customer's request.

In reply comments, the REP Coalition said that while they were open to the continued use of a postcard for notification purposes that did not affect switching timelines, they took issue with recommendations of Texas ROSE/TLSC regarding timely REP responses to customer switch cancellations, creation of a special REP customer service calling category for customers wishing to cancel switches, and customer counseling regarding switch cancellation during enrollment. The REP Coalition said that each of these recommendations sent a message of caution to the customer when switching REPs, implying that the customer should have second thoughts about the switching decision. They said that repeated warning messages to customers are counterproductive in the development of a vibrant market, and that there is no public policy rationale for requiring a business to repeatedly offer a customer information on how to cancel an affirmatively made purchase decision. Retail Electric Companies expressed support for these comments.

ERCOT replied that the Texas ROSE/TLSC proposals would require significant cost and changes to the existing process, including six to eight months to modify call procedures and 12 to 14 months to develop new Texas SET transactions to notify REPs of customer switch cancellations.

Joint TDUs supported the proposal by Texas ROSE/TLSC, saying it would result in shortening the maximum switch time from 45 to 35 days. The average switch time would be diminished from 26 to 16 days, and more than 75% of customer switches would be completed within 22 days and at no cost to the switching customer or to customers as a whole. Joint TDUs stated that there is no basis for assuming that customers would be dissatisfied with this timeline. Further, if REPs were to offer customers the option of paying for an out-of-cycle meter read, then those who wanted a shorter timeline could be accommodated under the current rules.

OPC and Cities expressed strong concern for a change in the process that resulted in the customer who has been switched without their permission first learning of the switch when they receive an invoice from a new REP. Cities said that some customers might not even respond to the invoice, assuming it is a mistake. This would further exacerbate the situation in the case of a slam. Cities were also concerned that elimination of the postcard might lead some agents contracted by REPs to believe that illegal practices will be profitable. Like Texas ROSE/TLSC, OPC favored the alternative postcard message and requirements that, upon notice by the customer, the new REP will be responsible for initiating and executing the process to return the customer to the customer's REP of record in accordance with §25.495.

Joint TDUs stated that the current postcard requirements allow time to correct switching errors before a switch takes place. They noted that 15% of switch requests in 2008 were not completed. They predicted that the result will be more incorrect switches, inadvertent gains, costs to correct switches, and impacts on retail customers and market participants.

Texas ROSE/TLSC noted that ERCOT sent out 674,000 postcard notifications in 2008 at a cost of just under one dollar each, and that of that number 23,887 customers exercised their option for rescission. Cities opined that it was not unreasonable to assume that some of these rescissions involved slamming or some other unlawful practice. Cities pointed out that the postcard may spur customers to review REP disclosure information more closely.

Reliant pointed out that customer slamming complaints were down 72% in 2008, compared to the 2003 peak. They stated that the postcard notification process was instituted at the beginning of retail choice to combat slamming, but that the retail market has matured significantly since retail competition began. Reliant cited Commissioner Nelson's January 14, 2009 memo, stating that no other industry provides postcard notification of a change of service provider, and that the postcard may create confusion for that reason. Cities countered that while other industries, such as wireless communications, do not have an analog to the ERCOT postcard, there are hardware compatibility issues that keep slamming from being such a problem; a cell phone that works on one network will require modification to work on a different network.

Reliant said that the rule as proposed offered ample customer protection, including fully informing customers of relevant information during the authorization process and a verification process to validate switches.

In reply comments, Cities disagreed with Reliant's conclusion that customer notification is no longer needed because the market has matured, resulting in decreased slamming. Cities said Reliant had failed to acknowledge that the current notification process may be one of the main causes of the decline in slamming. Cities said that elimination of the rescission period is moving in the wrong direction by overtly encouraging unethical REPs to engage in slamming, and might encourage high pressure telephone sales tactics. Cities said the concept of a "cooling off" period is sound, and that it allows customers additional time to consider service offerings, especially some of the more complex plans.

ARM contended that, while they were receptive to other ideas, the elimination of the postcard in its current form is essential to meaningful reduction in switching times. They said that the postcard required by §25.474(l) must be eliminated for switching timelines to be shortened sufficiently to meet the new provisions of the disclosure rule. It was ARM's position that no new customer protection rules are required to address slamming; a REP who switches a customer without authorization violates the commission's slamming rule (§25.495), which provides sufficient remedies to protect the slammed customer. The offending REP must bear all costs to return the customer to its chosen REP. Further, a REP who slams customers risks administrative penalties under §22.246 and suspension or revocation of its certificate pursuant to §25.107(j)(3). In addition, section 7 of the ERCOT Retail Market Guide addresses inadvertent gains, providing a process to cancel a pending switch or move-in transaction.

TXU Energy cited a Staff memo, stating that approximately 21,000 customers cancelled a pending switch using the 800 number on the current postcard, and said that while they were not aware of any other industry that provides this kind of notification, they believed that the postcard was responsible for preventing many inadvertent or illegitimate gains, saving customers significant frustration. TXU Energy believed that eliminating the postcard might shorten switching times, but it would also eliminate an important communications function that would be difficult to replace.

TXU Energy suggested retaining the postcard, but changing its message by directing the customer to their current REP if the customer had any issues with the pending switch. The rescission period would be eliminated, thus shortening switch times. TXU Energy acknowledged that this arrangement might lead to an increase in inadvertent gains, but the notification postcard would still allow the customer to contact the REP more expeditiously than would be the case in its absence.

Cities were unaware of any provision that might eliminate the need for the ERCOT postcard. They said email might be considered, but that all customers do not have email access, and fraudulent email addresses might thwart notification. ERCOT concurred, and noted that an email address is not a required field of information for any ERCOT transaction. Cities proposed to make the REP responsible to ERCOT for valid email addresses, and absent a response from the customer ERCOT would suspend the switch. Alternatively, Cities would require REPs to obtain third-party verification of the customer switch request, as is the practice for long distance telephone switches and as required by the Federal Trade Commission and some state agencies to reduce fraud.

Commission Response

The commission acknowledges the issues raised in these comments and retains the postcard switch notification, with modifications suggested by TXU Energy to include contact information for the current REP as well as changes requiring contact information for the new REP. The commission agrees with REP Coalition concerning Texas ROSE/TLSC's recommendations regarding special features on REPs' telephone systems for use by customers wishing to cancel switches. The commission does not find slamming to be so widespread as to warrant such warnings, and it is not aware of any other industry in which so many warnings are given to customers wishing to change service providers.

Regarding timely notification of cancelled switches by the new REP, §25.495 makes the new REP responsible for making the customer whole for any additional costs resulting from a cancelled switch; the commission finds this to be a sufficient stimulus for action on the part of the new REP to rectify the switch as soon as possible.

Cities and Texas ROSE/TLSC believed that the ERCOT postcard is an important consumer protection and urged the commission to reconsider its elimination. TEAM said they understood this concern, and suggested (along with OPC) the use of a "non-actionable" postcard that would not include information about rescinding the switch but would simply reiterate the customer's choice and provide contact information for both the new and former REPs. TEAM stated that the postcard provides a means of customer education, and could include information such as a description of the expedited switch timeline, a warning about early termination fees for customers with term contracts, or information about www.powertochoose.org.

In their reply comments, Joint TDUs said that in light of the comments of Texas ROSE/TLSC and TEAM, given the small percentage (12%) of customers who switch REPs each year, it would be better to remove the rescission period from the postcard and use the two existing meter reading processes (on- or off-cycle), with customers who request out-of-cycle reads paying for the cost of these. Joint TDUs said that while this would not meet the 14-day switching requirements of the disclosure rule, it would shorten the longest switch time from 45 to 35 days, with an average switching time of 16 days. They noted that either the REP disclosure rule's requirement for a 14-day timeline could be changed, or it could be recognized that some customers would have to pay for an out-of-cycle meter read to meet the 14-day requirement.

They recommended that the current process be left in place for non-POLR customers while advanced metering service is being implemented.

Cities replied that the alternative postcard with no automatic cancellation function places a greater burden on customers to work with their current REP when unauthorized switches occur, and this arrangement would rely on prompt and coordinated action between the current and gaining REP to reverse a switch before an invoice is sent by the gaining REP.

ERCOT said that if the existing postcard information needs to be modified because of the adoption of this rule, ERCOT will need 2-3 months to effect this change with its third-party service provider. ERCOT requested that the commission clarify whether the postcard will be sent to residential, small non-residential, and large non-residential customers that do not waive customer protection pursuant to §25.471(a)(3).

Commission Response

The commission concurs with TEAM, Cities, and Texas ROSE/TLSC that the postcard should be retained as a customer switch notification. The commission also concurs with TEAM and OPC on the use of a "non-actionable" notification, and adopts rule language that retains the customer switch notification and provides telephone numbers for both the previous and new REPs. The commission recognizes, as Cities point out, that the elimination of the automated cancellation feature will make it more difficult for customers to cancel a switch, but it concludes that there are significant advantages to customers in expediting customer switches. Customers' terms and conditions may change when a term contract expires, and to permit them to quickly switch to a plan of their choosing will significantly improve customers' experience regarding choice in retail electricity. For the same reason, the commission is not adopting the recommendation of the Joint TDUs, which could leave a customer on a plan that is not the customer's choice for up to 35 days.

TIEC noted that most of its members use interval data recording (IDR) meters and understand the benefits of advanced meters. They stated that advanced metering will alleviate many of the issues discussed herein. They were concerned that Discretionary Charges for meter reads under §25.214 are not class specific and that large customers may be impacted by the proposed rule changes. In their reply comments, they note that §25.475 (the REP disclosure rule) does not apply to large customers. Since the impetus for this rulemaking is the recent revisions to the REP disclosure rule, which does not apply to large customers, they urge that this rulemaking should not apply to large customers either. They suggested that the rule should explicitly target the mass market. TIEC initially understood the proposal for expedited switches at no cost to the customer would be applicable only to customers moving from POLR providers to other REPs. They found this arrangement appropriate, and questioned whether expedited reads should be available to all customers at no cost. TIEC requested that the commission retain on-cycle switching for customers with IDR meters, which would avoid many of the issues REPs have with implementation of a new switching process for all customer switches. This would be a temporary process for TDUs rolling out advanced metering systems (AMS), but would be a long-term change for those with no plans for AMS.

ERCOT requested that the commission clarify whether the expedited switch would take the place of on-cycle switches, or if the expedited switch would constitute a third option. If the latter is the case, ERCOT said that it would have to undertake significant system modifications requiring $4-5 million and 12-14 months to complete, thus undermining the commission's goal of quick implementation of the proposed rule.

TIEC replied that since expedited and out-of-cycle meter reads are both off-cycle and share similarities, it is worth considering whether the concept of expedited switching could be accomplished through on-cycle switching with certain process modifications.

TEAM and ARM commented that if the on-cycle switch process was retained, some switches could be performed in even shorter timeframes than are contemplated by the proposed amendments. In light of ERCOT's comments on the cost and time needed for system modifications to support a third type of switch, both TEAM and TXU Energy supported an approach with only two switch types. For clarity, TEAM and ARM suggested that the proposed expedited switch be referred to as a "standard" switch, and the out-of-cycle switch be referred to as a "self-selected" switch.

OPC and the REP Coalition agreed with TEAM and ARM's suggested use of in-cycle reads for expedited switches whenever they fall within the time specified for expedited switches. This would result in lower TDU costs to implement the rule, and would obviate the need for a sub-period bill for a minimal period of service.

Commission Response

The commission adopts the terms "standard switch" and "self-selected switch" to replace "expedited switch" and "off-cycle switch," respectively, as suggested by TEAM and ARM.

The commission finds that, in light of the time and costs for ERCOT to develop systems and procedures to support a third type of switch, there should only be two switching processes (standard and self-selected) and declines to retain the current on-cycle switch option suggested by TIEC, TEAM, and ARM. The commission believes that the TDUs will perform some of the switches on-cycle (under current timelines). Approximately 33% of expedited reads will fall within the three business days prior to the TDU's receipt of notification by ERCOT of first available switch date or within the four business days that begin with that notification. It is the commission's expectation that on-cycle meter reads will be used to effect standard switches whenever they fall within this period. The commission expects that TDUs will use the most cost-effective process available to effectuate standard switches under the expedited timeline that is adopted in this rule.

Texas ROSE/TLSC said that providing customers who want or need a standard switch is more important than making sure that all switches are faster. They preferred that the commission retain the out-of-cycle meter read to shorten switch timelines when customers need quick switches. Customers opting for out-of-cycle meter reads would pay for their cost. Customers who did not require a fast switch could still use the on-cycle meter read at no charge. Texas ROSE/TLSC said that the gaining REP should be required to explain and offer either option.

They said this approach should be tried prior to undertaking expensive and time-consuming system changes at ERCOT.

Texas ROSE/TLSC indicated further that if the commission chooses to displace on-cycle meter reads with expedited reads, they would prefer that the gaining REPs absorb the cost of meter readings for their customers. They said that all customers should not have to pay the costs for customers who switch.

TEAM expressed support for expedited switching, saying the process would ensure that REPs react to customer needs. They agreed that a 45-day switching interval was excessive, and said that allowing the market to be more nimble in fulfilling customer choice would bring greater pressure on REPs to offer services and programs that meet customer needs, and that the ability to switch REPs quickly would lead to improved customer satisfaction.

OPC suggested that one way to shorten switch times while constraining costs would be to keep the status quo for meter read options, and have customers who want to switch on a specific date request an out-of-cycle read. While this would not result in a reduction of all switch timelines, it will provide customers a choice.

Commission Response

The commission recently completed a project to enhance disclosures to customers and customer awareness. During that project, the commission found that REPs need to price their service plans with short lead times. The wholesale market can be volatile, so the retail price they quote to customers and the power purchases they make to support the retail offer may not be viable from one week to the next. To avoid pricing their products with large risk premiums, they often need to establish prices in one week that are no longer consistent with market conditions a week or two later. The expedited switching timelines in this rule should make it easier for REPs to make offers that are consistent with market conditions and for customers to obtain prices, make a decision, and switch from one REP or plan to another. Other customers may be on plans that permit a REP to change some of the terms and conditions during the term of the plan, with an option for the customer to cancel the service if they are not in agreement with the change. The commission does not believe that it should take 30-45 days to switch providers. The new switching timeline will permit these customers to move quickly to a plan that they prefer. The switching timeline is also consistent with the notice provisions of §25.475(d)(4)(F) which will require the REP to inform the customer of a change in the terms of the contract and that it can take up to seven business days to switch providers. Notifications of terms of service that would be available to a customer at the expiration of a contract are also predicated on a seven day switching timeline. The commission acknowledges the comments of Texas ROSE/TLSC and OPC, but concurs with TEAM that the market will be more responsive to customers' ability to switch REPs quickly if all standard switching timelines are shortened; and for this reason, it is also appropriate for all customers to help pay for the cost to shorten the timelines.

TEAM drew attention to the importance of customer education in this regard, and expressed support for legislative efforts to appropriately fund the customer educations efforts of the commission and OPC.

Commission Response

The commission concurs with TEAM that customer education in these matters is essential and encourages REPs to use every customer contact as an opportunity for customer education.

ERCOT suggested and the REP Coalition agreed that rather than eliminating the rescission period, if the customer rescission period were shortened to two days, a switch cancellation could still take place within the four business day expedited switch process. Texas ROSE/TLSC agreed with ERCOT's suggestion, and proposed to add a notice to the postcard that after the two-day rescission period, customers should contact the REP to cancel the switch, consistent with Texas ROSE/TLSC's initial comments.

Commission Response

The commission is requiring that contact information for the gaining and losing REPs appear on the postcard, but declines to adopt a requirement that the postcard include information about cancelling a switch. The commission believes that most of the switches that occur in the market are legitimate, and cancellation information would not be relevant for the vast majority of customers.

The commission declines to adopt language supporting a two-day customer rescission period on the postcard, but retains the three-day rescission period provided in subsection (j).

Joint TDUs noted that in any given year, 88% of customers do not switch REPs, but under the proposed rule the cost of expedited switches will be borne by all customers. They urged the commission to take time and care in the resolution of this issue. They pointed out that there is no perfect answer for implementing expedited switching processes prior to the advent of AMS. They said that switching is one of the most important processes in the market, requiring careful coordination between the losing REP, the gaining REP, the TDU, and ERCOT while protecting the customer and minimizing cost. Joint TDUs commented that the existing model, in which 90% of switches are completed using on-cycle meter reads, is the most efficient and cost effective approach given currently available technology. Further, they contended that once the proposed rule is adopted, it will take a minimum of six months to create, test, and implement the TDU system changes that the proposed rule will necessitate, and that a similar period may be required by other market participants. However, the Joint TDUs pointed out that these changes are needed only pending AMS deployment. Given this, Joint TDUs said the best compromise between speed, least cost, and effectiveness may be a less streamlined process.

REP Coalition stated in reply comments that, given the requirements of recently adopted §25.475(d)(4)(F), the compliance deadline for this amendment cannot extend past August 16, 2009.

Oncor expressed concern regarding the timing and cost to make the operational changes that expedited switching will require, and requested that the commission delay the effective date of this rulemaking until September or October 2009. Oncor noted that a delayed effective date was included in the recent amendments to the REP disclosure rule. Oncor appreciated the close interaction between the two rules but urged the commission to evaluate the requirements and consequences of the proposed rule on a stand-alone basis and consider amending or deferring the effective date of the REP disclosure rule if the commission determines that both rules must be implemented at the same time. Oncor said that while REPs had suggested that they could be ready to meet the currently proposed deadline, Oncor could not. Oncor noted that market participants had been given only five months to implement the REP disclosure rule and that the commission did not appear to directly take comments regarding timing and implementation.

In light of the August 16, 2009 compliance date of the REP disclosure rule and their understanding of the lead times needed by ERCOT to implement the two meter-read options, ARM requested that the compliance date for this amendment be the same. ERCOT requested that the rule be adopted during April 2009 to provide ample time for its implementation. ERCOT requested that the rule be adopted as soon as possible in light of the August 16 compliance date in the REP disclosure rule.

Commission Response

The commission agrees with ARM that to be consistent with the requirements of the REP disclosure rule the compliance date for this amendment should be August 16, 2009. The commission recognizes that the TDUs will need additional time to comply with this rule and has adopted language allowing TDUs until December 1, 2009, to comply with the requirements for actual rather than estimated meter reads.

Joint TDUs were concerned that the proposed rule would require them to provide a new service with no assurance of cost recovery. They stated that if the rule is changed to spread costs for expedited switches across all customers, TDUs should be allowed to choose the most cost-effective meter reading alternative, including estimates. Failing this, Joint TDUs predicted that switching costs would increase eight to ten times. They argued that the REPs' concerns about estimated meter reads were a good argument for leaving the current process in place. Oncor echoed these concerns, saying that it could not reasonably obtain actual meter reads for all switches within the time contemplated for implementation of the proposed rule, and that even if there were sufficient time, the direct costs to market participants for Oncor alone would be approximately $6 million.

Oncor urged the commission to permit estimates as necessary to meet the timelines set forth in the proposed rule. Oncor noted that the proposed discretionary service charge provides for estimation of a meter read to complete an expedited switch, thus reflecting the Commission's desire to minimize the financial impact to the market. Without estimation, Oncor pointed out, the additional cost to the market will substantially increase in order to hire additional staff in the short term and then ultimately reduce staff as each TDU deploys AMS throughout its service area. Oncor stated that, given the current implementation schedule for advanced meters within its service area, only 60% of meters would be candidates for estimation at the time the rule is implemented. A year later this figure would fall to 40%. Additional costs to perform actual meter reads for expedited switches for these non-AMS meters will be approximately $5.1 million. Oncor noted that it had significant institutional knowledge of estimated meter reads and were sympathetic to the variety of concerns raised by the REPs in this regard. They said that these concerns were also recognized in the 2006 revision of TDU terms and conditions.

TEAM, REP Coalition, and TXU Energy strongly opposed the routine use of estimated meter reads for switches. TXU Energy said that estimated meter reads were one of the largest drivers of customer complaints, and that even when exhaustive efforts are made to investigate and revise estimates as appropriate, the process still produced poor customer experiences. TEAM said that the change to six-day switches was positive, but the proposed allowance of estimated meter reads at the discretion of the TDU was problematic. TEAM said that estimated meter reads were unfair to customers and both REPs involved in a switch because the lack of accuracy can lead to misplaced customer dissatisfaction with the new REP, creates the likelihood of imprecise and costly hedging decisions for both REPs, and can lead to REPs adding risk premiums to their retail prices.

Joint TDUs replied that these concerns were unfounded and should not be used as a basis to prohibit estimated meter reads. They said that the allegation that customers will be dissatisfied with estimates is unproven, and that the REPs should set expectations with the customer in the process of switching. They argued that estimates used in expedited switches would be for relatively short periods, compared to estimates of regular monthly bills in which an entire month of usage is estimated. Joint TDUs said that estimated meter reads are reasonably accurate in the vast majority of cases, and that given the shorter usage periods being estimated for expedited switches, the accuracy should be even better. They said that even if an estimated read were off by an entire day, the cost of the error would come to only $1.00 for a customer using 1,000 kWh per month switching in the middle of the month with a retail cost differential of $.03 per kWh. They pointed out that even actual reads have an element of error, as ERCOT settlement occurs at midnight every day, while the meter readings were taken throughout the day, thus an estimated read is very unlikely to produce a significantly less accurate result than an actual read. In terms of harm to the REP resulting from estimated reads, Joint TDUs said that it would take a very large percentage of a REP's customers switching in a given month for any impact to be detectable.

Oncor's reply paralleled those of Joint TDUs. Oncor said that its current system of profile-based estimation yields results within 5% of actual reads. Oncor noted that the volume of switch-related meter reads varies widely from month to month and day to day. They urged customer education by the commission, REPs, and TDUs regarding the value of expedited switches and the fact that it comes at no cost to the customer with the possibility of an estimated read. They suggested that the possibility of an estimated meter read be included in the necessary disclosures by the REP rather than have customers be surprised after the fact. As an alternative, they suggested that estimated meter reads for the purpose of a switch could be deemed "final" for both wholesale and retail settlement. While admittedly unorthodox, Oncor said that this arrangement would eliminate uncertainty and irritation that both REPs and customers experience in a cancel-rebill true-up.

REP Coalition said in replies that no level of accuracy in estimation could overcome customer misgivings about estimated meter reads.

TEAM argued that the cost to TDUs for expedited switches could be recouped under the surcharge proposed in §25.214(o). They also quoted Commissioner Nelson's December 18, 2008 memo filed in Project No. 35768 that suggested that TDUs could recover switching expenses as regulatory assets in rate cases. TEAM concluded that there could be no basis for a TDU arguing that actual meter reads rather than estimates would be cost-prohibitive. Oncor replied that they cannot reasonably obtain meter reads for all expedited switches, given the cost and time to do so.

Commission Response

The commission concurs with REPs' concerns regarding estimated meter reads, but recognizes that there should be some provision allowing estimates to occur on an ongoing, but limited, basis. The demand for meter reads for purposes of a switch often varies significantly from month-to-month and day-to-day; therefore a TDU needs some leeway to use estimated reads in such circumstances.

The commission also recognizes that the TDUs may be initially unable to meet the requirements of the amended rule, which restrict the number of estimated meter reads for purposes of expedited switches. In light of this, the commission adopts language which allows TDUs to use unlimited estimated reads for expedited switches until December 1, 2009, at which time they will be required to perform actual reads for 80% of non-AMS meter reads for the purpose of a switch in any given month, and for any calendar year 95% must be actual reads. TDUs will be required to file quarterly reports indicating whether they are in compliance with this standard.

The commission understands that, customers may still have concerns regarding use of estimated reads for switches. The commission concurs with Oncor's recommendation and urges REPs to inform and educate customers of the possibility of estimated meter reads during the sales process. Additionally, the commission adopts language allowing for a cancel/re-bill for estimated meter reads in which the customer notifies the REP that the data appears to be erroneous.

ARM argued that once a TDU has given a "scheduled date" for a standard switch, it is imperative that the meter read occur on that same date so that REP energy purchases to cover the load of the new customer will coincide with the switch date. Joint TDUs said this would remove the flexibility of four business days to schedule the meter read in the proposed rule. They said this would further exacerbate the challenge of staffing for meter reads for the purpose of switches.

Commission Response

The commission concurs with ARM and adopts language requiring the TDU to honor the scheduled date it has given for a switch.

In reply comments, Cities expressed concern for unintended consequences resulting from this project, its commendable intention notwithstanding. They said that when the potential for increased slamming, increases in TDU costs, requests for additional tariffs or regulatory assets, and disruptions caused by more estimated bills were taken into consideration, the costs appear to outweigh the benefits of expedited switching until advanced metering systems are in place. They suggested that we might be better served to consider expedited switching only for mass transitions at this time. Cities requested that the commission re-examine the full consequences of the approach it has taken, and determine whether it continues to believe the benefits of the desired objective outweigh the costs. These concerns were echoed by Oncor, which suggested that elimination or modification of the ERCOT postcard to provide only a notice of switching, coupled with speeding up some of the switching processes, might achieve the desired result. Cities also suggested a side-by-side comparison of the proposed rule and the REP disclosure rule timelines to determine whether a small revision in each might result in a better customer experience.

Commission Response

The commission notes the concerns expressed by Cities and Oncor, but believes that the benefits of shortening the switching timeline outweigh their costs by making the market more responsive to customer needs, and facilitating the other benefits from the amendments to §25.475. It should be noted that customers still have a three-day rescission period under §25.474(j).

2. What changes to PUC rules or ERCOT protocols need to be made to address "slamming" and a speedy switch back to the original REP at no additional cost to the retail customer?

Cities contended that correction of all unauthorized switches should take precedence over other switches, and that a slamming REP should be required to pay 150% of charges resulting from an unauthorized switch, with the valid REP retaining two-thirds and the remaining one-third going to the customer, even if the customer did not remit payment for the first month bill from the slamming REP.

Commission Response

The commission disagrees with Cities' contention that punitive fees are appropriate to combat slamming, and finds that current rules in which the new REP must fully compensate the customer for any costs associated with an unauthorized switch are sufficient to guard against slamming.

OPC noted that while §25.495 requires REPs to report unauthorized switches to ERCOT, the rule does not specify a timeline to remedy slams. OPC observed that the ERCOT Market Guide places some parameters around returning the customer to its chosen REP, but these parameters are tied to the date the inadvertent gain is logged on MarkeTrak rather than the date of the unauthorized switch, thus extending the time to rectify the unauthorized switch. OPC proposed that §25.495 be amended to provide a maximum of 15 days from the time a customer informs a REP of an unauthorized switch until the customer is returned to its prior REP. OPC offered language for §25.474, directing a REP to initiate switch back processes in accordance with §25.495.

Reliant stated that the current §25.495 adequately addresses resolution of unauthorized switches. Oncor noted that slamming is addressed in §25.495, the ERCOT Market Guide, and MarkeTrak processes, but requested continuing confirmation from the commission that the REP responsible for an inadvertent gain pay all costs associated with returning the customer to its original status, and that these costs are not to be passed through to the customer. Oncor was unsure whether the expedited switching process contemplated in the proposed rule might result in increases in inadvertent gains.

Commission Response

The commission agrees with Reliant and declines to amend §25.474. As stated earlier, gaining REPs must bear all costs to restore customers who are switched without authorization to their original REP. This provides sufficient incentive for the gaining REP to take action quickly to undo unauthorized switches.

TXU Energy stated that the processes currently in place to rectify inadvertent gains will be viable after this rulemaking to expedite customer switching goes into effect. But TXU Energy also noted that, under the current switching timelines, few customers have had their switches completed prior to expiration of the rescission period. This may well not be the case should the switching timeline be shortened, resulting in an increase in inadvertent gains.

Commission Response

The commission notes TXU Energy's concern and notes that careful monitoring should be done to ensure that the processes in place are meeting the needs of the market participants and customers.

TXU Energy suggested that all TDU fees for returning customers to their original REPs, especially when the customer has exercised the right to timely rescission, should be waived and instead become regulatory assets.

Oncor stated that inadvertent gains are resolved between two REPs, and that the TDU participates only once such a resolution is reached. Oncor said that TXU Energy's suggestion would result in an uplift of these costs to the market as a whole, and that this socialization of costs does not follow the general rate principles of cost causation. Oncor suggested that any review of the inadvertent gain process should be done in the context of amending §25.495.

Commission Response

The commission disagrees with Oncor, and finds that the costs to implement these amendments will serve to improve the functionality of the market for all customers, not just those who choose to switch providers in a given year. For this reason, socialization of the costs is appropriate.

3. What is the most appropriate means for TDUs to seek to recover significant increases in meter-related costs associated with meter reads for standard switches?

Texas ROSE/TLSC stated that in cases of mass transitions or where customers have advanced meters, it is not appropriate for TDUs to charge fees for switching. In cases in which a TDU employee must physically read the meter, Texas ROSE/TLSC and TIEC favored having the charges paid by the customer requesting a switch. Joint TDUs concurred in reply comments. Texas ROSE/TLSC said the fact that many REPs refuse to offer meter reads other than those normally scheduled is a serious problem.

Joint TDUs said that, absent billing the switching customers for meter reads, and in light of pending AMS implementations, they favored treatment of the cost as a regulatory asset. Recognizing the fact that a given TDU rate case may be years away, they noted that carrying charges would be appropriate for these expenses, and the fact that these costs would diminish as AMS becomes more prevalent made the regulatory asset approach even more appropriate. They warned against parties supporting a regulatory asset now, only to oppose rate relief for the cost in a rate case, and urged the commission to make the rule clear with regard to the recoverability of these costs upon determination of their reasonableness.

REP Coalition stated that they also favored use of a regulatory asset to recover TDU costs of actual meter reads for expedited switches. This would give the commission the ability to examine costs in a rate case, thus preventing over-recovery. Furthermore, the proposed surcharge amounts to piecemeal ratemaking, and a regulatory asset is a more reasonable approach in light of the expectation that the frequency of physical expedited reads will diminish with the advent of AMS.

Cities said it was unclear whether TDUs would incur additional costs or whether such costs would be significant under the proposed rule and opined that a rate case was the best vehicle for evaluation of overall TDU costs and revenues. To the extent costs are incurred to rectify unauthorized switches, Cities suggested that the gaining REP should be responsible for those costs.

Citing the AMS surcharge already in place for customers in Oncor and CenterPoint service areas, OPC could not endorse a process that would result in another charge to all customers to reduce switching timelines. OPC and TXU Energy further stated that, absent an amendment to PURA, the commission has no authority to enable a surcharge. OPC cited PURA §36.201, which states that, "the commission may not establish a rate or tariff that authorizes an electric utility to automatically adjust and pass through to the utility's customers a change in the utility's fuel or other costs." But OPC was not fundamentally opposed to recovery of incremental costs by TDUs for meter reads for standard switches, subject to commission review and verification of the necessity and reasonableness of the charges. OPC said that any such charges should have a specified end date and should diminish as advanced meters are rolled out, with no charges for switching of customers with advanced meters. Reliant concurred, saying that a surcharge should only cover costs over and above those covered in the TDU's last rate case (adjusted for load growth), should not result in over-recovery of costs, and should be adjusted annually to reflect any over- or under-collection of meter reading expenses from previous years. Their proposed language also eliminated the current rule's proscription of reconciliation and retroactive recovery of costs, and limited cost recovery to those in FERC Account 902. OPC said that if the commission does not adopt OPC's suggestion for use of on-cycle and out-of-cycle meter reads exclusively, and if the commission chooses a reimbursement mechanism, OPC endorsed Reliant's suggested language to ensure that the surcharge can be reconciled.

Joint TDUs replied that to assume that costs for meter reads for standard switches would be charged to FERC Account 902 is incorrect and irrelevant to the determination of whether the costs were incurred to provide service as required by the rule.

In addition to raising costs, which AMS might eliminate in the long run but would have no impact in the near term, Oncor argued that the proposed rule would prevent TDUs from collecting fees that have been approved by the commission, and requested that the commission recognize the TDU's loss of revenue resulting from commission action. They stated that while expedited switching costs might not rival those of a new transmission line, they are still real costs. They favored having expedited meter reads be treated as regulatory assets, a recommendation with which TXU Energy concurred.

Cities replied that they were not aware of any legal authority for the commission to allow the commission to create new tariff surcharges outside of a general rate case. They opposed creation of a regulatory asset for this purpose, as it would shift costs to future rate cases, along with decisions on how and from whom to recover the costs. Additionally, they said that TDUs have made no showing that the costs in this instance exceed the normal level of regulatory lag. Cities argued that these issues would not arise if expedited switching costs were paid by the REP requesting service. They said the only expedited switching costs that should be socialized were those associated with mass transitions, due to the accompanying negative impacts on the market.

They said that the proposed amendments serve to eliminate one entity's rate and shift the costs to the general body of ratepayers through a surcharge was unprecedented and unwarranted.

TIEC commented that costs for expedited switches should be borne by the customers who request them. Failing this, they stated that any cost-free meter read policy should apply only to customers with non-IDR meters. In TIEC's view, the current system works well for large customers, many of whom have contracts that contemplate the current meter read system. In reply comments, TIEC said that loss of revenue should not be addressed through either a surcharge or a regulatory asset or by raising fees for out-of-cycle meter reads.

Joint TDUs and Oncor stated that cost recovery for TDUs should not be limited to "significant increases," as all costs for expedited switches will represent increases in cost. Joint TDUs noted that the new service will result in potentially thousands more meter reads per week over current levels, and that none of the costs for these additional reads will be recovered absent specific provisions by the commission. Joint TDUs and Oncor further said that PURA §36.051 allows for recovery of "reasonable and necessary operating expenses" rather than "significant" costs. Joint TDUs opined that the rule should provide for timely recovery of TDU costs through either a surcharge or regulatory asset, at the TDU's option. They said that if recovery was through a surcharge, the surcharge should be put in place at the time the new service is made available, should be based on a forecast of the projected number of reads and/or estimated reads, and should include costs for reprogramming and creating systems and purchase of any hardware required. They stated that, pursuant to PURA Chapter 36, Subchapter C, the TDU should file for approval of a rider for the surcharge prior to initiation of expedited switching service. Joint TDUs stated that the surcharge should continue until obviated by implementation of AMS or until completion of a general rate case that includes consideration of these costs.

Oncor contended that the authorization for a regulatory asset is the appropriate cost recovery mechanism. It argued that when future costs are unexpected or unpredictable the use of a regulatory asset is warranted, whereas a surcharge is appropriate for expected levels of similar future costs. Further Oncor suggested that case law overturning the commission's approval of a regulatory asset in Office of Public Utility Counsel v. Pub. Util. Comm'n, 888 S.W.2d 804 (Tex. 1994) is not applicable. Oncor argued that the Supreme Court's decision pertains only to cases where a regulatory asset is used to alleviate regulatory lag, and in contrast, use of a regulatory asset in this instance is not meant to alleviate regulatory lag.

Oncor noted that the proposed tariff modifications will result in an explicit loss of revenue due to the fact that an Expedited Meter Read for the Purpose of a Switch has previously been accomplished by and billed as an Out-of-Cycle Meter Read for the Purpose of a Switch. In Oncor's case, the charge is $7.25 for each out-of-cycle meter read. Texas ROSE/TLSC opposed uplifting the costs of expedited meter reads and allowing the TDUs to recover costs through a surcharge.

Commission Response

Allowing TDUs special cost recovery for the increased costs that result from performing meter reads for the purpose of standard switches is appropriate because these rule amendments will necessitate that TDUs alter their meter reading practices in a manner that will increase their costs. While noting comments by Texas ROSE/TLSC and TIEC, the commission finds that it is appropriate to allow costs incurred in shortening switching timelines to be borne by all customers because this benefit will be available to all customers and will increase market responsiveness for all customers.

The commission adopts rule language that allows TDUs at their discretion, to seek cost recovery either through a regulatory asset or under the advanced metering system (AMS) surcharge allowed under §25.130(k). Because circumstances vary among TDUs, the commission is allowing each TDU to determine which cost recovery mechanism best suits their situation. The commission recognizes that these costs will be incurred in order to provide a critical benefit of advanced metering functionality for customers: the ability to quickly read a customer's meter without cost to that customer. This will allow the TDU to flow through the cost of reading a conventional, non-advanced meter in order to expedite the switching process for customers before AMS is deployed to all customers in the service territory. The commission finds that this is an essential modification to the competitive retail market, and therefore, is applying a mechanism in §25.474(p) which allows the TDU to exercise this option.

Alternatively, a TDU may choose to create a regulatory asset for recovery of costs. This additional option is appropriate, as not all TDUs are currently deploying advanced meters, and thus have no AMS surcharge in place for this purpose.

In initial and reply comments, respectively, Reliant and REP Coalition proposed a modification of Section 4.3.4 of the TDU tariff to clarify that, unless a specific date is requested in the transaction, the TDU shall perform an expedited meter read in accordance with timelines provided in Chapter 6 of the tariff, relating to company specific rates and schedules. Reliant also proposed new Section 4.8.1.X, which would state that if no specific date is requested for a switch, the TDU will perform an expedited meter read in accordance with the timelines of Chapter 6, and provide the meter read to both the losing and gaining REP on the next business day. The date of the meter read determines the last billing date for the losing REP and first billing date for the gaining REP. In reply comments, TIEC noted that this section was noticed "no-change," and argued that the suggested revisions would constitute a violation of notice requirements in Government Code §2001.024.

In reply, Oncor took issue with Reliant's proposed new section, specifically the requirement that the meter reading data be delivered the next business day. Oncor stated that the current TDU tariff allows three business days for this, and that shortening the time would result in diminished data accuracy in that it would preclude parameter testing that currently detects and eliminates "outlier" meter reads.

Commission Response

The commission disagrees that further tariff revision is needed for clarity, as the tariff language clearly states that the meter read for the purpose of a standard switch shall be used unless the self-selected switch alternative is specified by the REP. The commission, therefore, does not adopt the language proposed by REP Coalition and Reliant.

General Comments

TXU Energy argued that expedited switching will create a potential for customers to "game" the system in cases of disconnection for non-payment; a REP is required to give at least ten days' notice prior to disconnection for non-payment, while the proposal would allow a customer to switch REPs upon receipt of a disconnect notice and have service switched to the new REP before the original REP was disconnected, leaving the original REP with a bad debt. TXU Energy said that increased bad debt for REPs would be reflected in higher prices for all customers. TXU Energy said that this unintended consequence may require careful monitoring by the commission. In their reply comments, Retail Electric Companies acknowledged TXU Energy's comments in this regard and concurred.

Commission Response

The commission maintains that the benefit of shortened switching times for customers outweighs any impact of gaming by non-paying customers. REPs have safeguards against non-payment in the form of customer deposits and may have other recourse through credit reporting agencies and collections processes.

Joint TDUs proposed changes to clarify that if an estimate is performed it should not count for the purposes of the limitations on the number of consecutive estimates that the TDU is allowed to perform. In reply comments, the REP Coalition countered that there is no legitimate reason why an estimated meter read for the purpose of a switch should not be included in the count as a policy matter.

Commission Response

The commission concurs with Joint TDUs. The basis for limiting TDUs estimated reads was to ensure that customers provided access to their meters and that TDUs would rely primarily on actual reads rather than estimates for regular, on-cycle meter reads. Since the commission is requiring a TDU to read a meter apart from an on-cycle meter reading, it should not count against the TDU for its consecutive estimation allowance.

Section 25.214

ARM suggested that meter reads for standard switches be performed within four business days rather than six calendar days to be consistent with the basis for the ERCOT protocols.

Commission Response

The commission concurs and adopts language consistent with ARM's suggestion.

Section 25.474

Oncor proposed that the commission make clear that a REP shall not charge a fee to an applicant to switch to, select, or enroll with the REP unless the applicant requests an out-of-cycle meter read for the purpose of a switch.

Commission Response

The commission agrees with Oncor. REPs shall not charge a switching fee absent an applicant request for an out-of-cycle (self-selected) switch and amends the rule accordingly.

Subsection (j)

Reliant stated that the right of rescission in subsection (j) is no longer workable as it is virtually impossible to do so without assuming the full risk of any power used by a customer that cancels, which is precisely why the right of rescission is not applicable to a move-in. Door-to-door sales are allowed a rescission period because the contracts are handed to the customer upon enrollment.

Commission Response

The commission declines to modify subsection (j), as the three-day right of rescission provides an important opportunity for the customer to review the terms and conditions of the service agreement. The commission notes that while Reliant is correct in saying that federal law requires the three-day rescission period only for door-to-door sales, the commission finds that the rescission period should apply to customers who are switching regardless of the sales channels.

Subsection (k)

ARM proposed to modify subsection (k), so that TDUs would perform the expedited read on the regularly scheduled date if it falls within the timeframe the TDU has to read the meter, rather than reading it earlier.

Commission Response

The commission concurs and adopts language in subsection (o) stipulating that the on-cycle read should be used if it falls within the three business days prior to the first available switch date, or within the four business days that begin on that date.

Texas ROSE/TLSC were concerned that the proposed rules might not be sufficient to enforce the rescission protection.

TIEC argued that it was necessary to maintain the options that IDR customers have previously had available for an on-cycle or an off-cycle meter read. TIEC stated that contract provisions may tie a customer's ability to switch providers to the on-cycle meter read date and eliminating this option could impair the ability of larger customers to negotiate optimal contract terms. The REP Coalition replied that ERCOT had warned of expense and delay if three (on-cycle, off-cycle, and expedited) switching processes were required, and that ERCOT cannot develop a switching process for one class of customer that differs from those used by other customers. The REP Coalition concluded that only two switching processes should be allowed, in the interest of moving the project forward. The REP Coalition suggested that IDR customer requirements could be met with out-of-cycle meter reads.

Commission Response

The commission concludes that IDR customers' requirements can be met with the option of a standard switch or a self-selected switch.

Joint TDUs recommended new titles for the proposed services in the rule: "switch on a date certain" and "switch not on a date certain." AEP, CenterPoint, and TNMP recommended that the rule specify the number of days that the customer has to request cancellation of the switch, rather than that the customer will be returned to its chosen REP on the basis of a timely request. Joint TDUs proposed that, should the customer fail to respond within the specified time, the customer should either request a new switch to return to its chosen REP or accept service from the other REP.

Commission Response

The commission declines to adopt new language as proposed. As is noted in the discussion of the terminology in the comments on the tariff, "expedited" switching has been changed to "standard" switching, and "out-of-cycle" has become "self-selected" switching. The commission finds these terms to be as descriptive, and less cumbersome than those proposed by the Joint TDUs.

The commission disagrees with AEP, CenterPoint, and TNMP's recommendation that the rule specify the maximum number of days for a customer to cancel a switch, rather than merely requiring that the cancellation be "timely." The amended language in §25.474(k) requires conformity with subsection (j), which allows customers three federal business days after receipt of terms of service to rescind the switch.

The commission declines to adopt language supporting Joint TDUs' proposal that, should customers fail to exercise their right of rescission within the time allotted, they must either issue a new switch request to be returned to the original REP or their service will remain with the new REP. Joint TDUs failed to cite problems or issues that may have arisen from the pre-existing right of rescission language in subsection (j), and subsection (j) was listed as "No Change" in the Proposal for Publication.

Subsection (l)(2)

ARM and Reliant proposed that the term "affiliated REP" be deleted from subsection (l)(2). OPC proposed changes consistent with its postcard proposal. Joint TDUs recommended that the term "POLR" be made consistent with the term chosen in the amendments to the POLR rule in Project No. 35769.

Commission Response

The commission agrees that it is appropriate to delete the word "affiliated" in this subsection, but it is continuing to use the term POLR here, as the use of the term has been continued in the POLR rulemaking project.

The commission agrees with OPC, and adopts a modified postcard which notifies the customer of a switch and provides contact information for the old and new REPs in the event the customer does not authorize the switch.

Texas ROSE/TLSC reinforced the need to retain and develop protocols at ERCOT that assure that all switches in process are to be honored during a mass transition.

Commission Response

The commission has addressed this issue in the POLR rulemaking and therefore declines to address it here.

Subsection (l)(3)

OPC recommended adding a paragraph in subsection (l)(3), requiring the REP to initiate the rectification process by the close of the business day upon notification of an unauthorized switch. REP Coalition replied that this requirement would have no benefit for the customer, as the existing inadvertent gain process restores the customer to its original REP with no interruption in service and at no harm to the customer.

Commission Response

The commission concurs with REP Coalition and takes no action in this regard.

Subsection (n)

Joint TDUs proposed language to make clear that the TDU could still charge the customer a fee for denial of access.

Commission Response

The changes to the tariff and §25.474 do not affect the provisions in the tariff relating to denial of access, which remain in effect. The commission, therefore, declines to adopt Joint TDUs' proposed language.

CenterPoint and the Retail Electric Companies proposed that the TDUs be required to include certain costs in their cost recovery and that TDUs be prohibited from charging a fee related to the estimate adjustments in subsection (q).

Commission Response

The commission adopts language precluding the TDU from charging fees for adjustments to estimated meter reads or for switch cancellations and requiring that costs for switch cancellations during the three-day customer rescission period be included in cost recovery.

Subsection (q)

The Retail Electric Companies filed language on May 28 amending subsection (q) to address these concerns. In this proposal, amendments to the estimate will occur in two situations. First, if the next actual reading after an estimated switch is less than the estimate, this is clear evidence that the estimate was incorrect. Therefore, the estimate for the losing REP should be adjusted on a non-discriminatory basis. Under the proposed amendments filed by the REPs, subsection (q)(2)(A) would require an adjustment in this situation.

The REP stakeholders also developed language whereby, in response to a complaint from the customer, if it is determined that usage per day for the estimated period is at least 25% greater than or 25% less than the average actual kWh usage per day, based on the next actual read, then the TDU would adjust the estimate and the customer would be rebilled. This creates a clear standard that the REPs and TDUs would follow to adjust a customer's bill. Subsection (q)(2)(B) addresses the review and adjustment in this situation.

AEP Texas proposed a specific methodology for the estimate adjustment process. CenterPoint expressed general agreement with the concept of adjusting the estimate and supported AEP Texas's proposed modifications.

Commission Response

The commission appreciates AEP's proposed modification of the adjustment process, but is reluctant to impose a single process on all the TDUs. Subsection (q)(2)(C), as proposed by the REP stakeholders, allows the TDUs to use a reasonable methodology for the adjustment of an estimate. The commission believes that AEP Texas's proposal to adjust the estimate using the average daily kWh usage based on the actual read is a reasonable methodology and would be allowed under the proposed REP language. However, the commission does not want to preclude the other TDUs from using another adjustment methodology that is also reasonable.

The commission believes that the adjustment to a customer's bill should be contingent on the REP actually receiving a customer complaint. The first sentence of subsection (q)(2)(B) is modified to read: "Only upon the receipt of a customer dispute of the estimated usage to either the gaining or losing REP, either REP may request the TDU review the estimate."

The commission adopts the language proposed by the Retail Electric Companies, as modified.

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.

TDUs shall apply to amend their tariffs to comply with the amendments adopted herein within ten days of the effective date of the amendments.

SUBCHAPTER I. TRANSMISSION AND DISTRIBUTION

DIVISION 2. TRANSMISSION AND DISTRIBUTION APPLICABLE TO ALL ELECTRIC UTILITIES

16 TAC §25.214

(Editor's note: In accordance with Texas Government Code, §2002.014, which permits the omission of material which is "cumbersome, expensive, or otherwise inexpedient," the figure in 16 TAC §25.214 is not included in the print version of the Texas Register. The figure is available in the on-line version of the June 26, 2009, issue of the Texas Register.)

This section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 2007 & Supplement 2008) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. The commission also adopts these rules pursuant to PURA §36.001, which grants the commission authority to establish and regulate rates of an electric utility; §36.003, which requires that the commission ensure that each rate of an electric utility is just and reasonable; §39.101, which grants the commission authority to establish various, specific protections for retail customers; §39.102, which provides for retail customer choice; §39.203, which grants the commission authority to establish reasonable and comparable terms and conditions for open access on distribution facilities for all retail electric utilities offering customer choice, and comparable rates for open access for all retail electric utilities offering customer choice, and PURA Chapter 17, Subchapters A and C, which deal, respectively, with general provisions relating to customer protection policy and the retail customer's right to choice.

Cross Reference to Statutes: PURA §§14.002, 36.001, 36.003, 39.101, 39.102, 39.203 and Chapter 17, Subchapters A and C.

§25.214.Terms and Conditions of Retail Delivery Service Provided by Investor Owned Transmission and Distribution Utilities.

(a) Purpose. The purpose of this section is to implement Public Utility Regulatory Act (PURA) §39.203 as it relates to the establishment of non-discriminatory terms and conditions of retail delivery service, including delivery service to a Retail Customer at transmission voltage, provided by a transmission and distribution utility (TDU), and to standardize the terms of service among TDUs. A TDU shall provide retail delivery service in accordance with the terms and conditions set forth in this section to those Retail Customers participating in the pilot project pursuant to PURA §39.104 on and after June 1, 2001, and to all Retail Customers on and after January 1, 2002. By clearly stating these terms and conditions, this section seeks to facilitate competition in the sale of electricity to Retail Customers and to ensure reliability of the delivery systems, customer safeguards, and services.

(b) Application. This section, which includes the pro-forma tariff set forth in subsection (d) of this section, governs the terms and conditions of retail delivery service by all TDUs in Texas. The terms and conditions contained herein do not apply to the provision of transmission service by non-ERCOT utilities to retail customers.

(c) Tariff. Each TDU in Texas shall file with the commission a tariff to govern its retail delivery service using the pro-forma tariff in subsection (d) of this section. The provisions of this tariff are requirements that shall be complied with and offered to all REPs and Retail Customers unless otherwise specified. TDUs may add to or modify only Chapters 2 and 6 of the tariff, reflecting individual utility characteristics and rates, in accordance with commission rules and procedures to change a tariff; however the only modifications the TDU may make to 6.1.2.1 are to insert the commission-approved rates. Additionally, in Company specific discretionary service filings, Company shall propose timelines for discretionary services to the extent applicable and practical. Chapters 1, 3, 4, and 5 of the pro-forma tariff shall be used exactly as written. These chapters can be changed only through the rulemaking process. If any provision in Chapter 2 or 6 conflicts with another provision of Chapters 1, 3, 4, and 5, the provision found in Chapters 1, 3, 4, and 5 shall apply, unless otherwise specified in Chapters 1, 3, 4, and 5.

(d) Pro-forma Retail Delivery Tariff.

(1) Tariff for Retail Delivery Service.

Figure: 16 TAC §25.214(d)(1) (.pdf)

(2) Compliance tariff. Compliance tariffs pursuant to this section must be filed by February 15, 2008.

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 15, 2009.

TRD-200902421

Adriana A. Gonzales

Rules Coordinator

Public Utility Commission of Texas

Effective date: July 5, 2009

Proposal publication date: February 13, 2009

For further information, please call: (512) 936-7223

16 TAC §25.474

This section is adopted under the Public Utility Regulatory Act, Texas Utilities Code Annotated §14.002 (Vernon 2007 & Supplement 2008) (PURA), which provides the Public Utility Commission with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. The commission also adopts these rules pursuant to PURA §36.001, which grants the commission authority to establish and regulate rates of an electric utility; §36.003, which requires that the commission ensure that each rate of an electric utility is just and reasonable; §39.101, which grants the commission authority to establish various, specific protections for retail customers; §39.102, which provides for retail customer choice; §39.203, which grants the commission authority to establish reasonable and comparable terms and conditions for open access on distribution facilities for all retail electric utilities offering customer choice, and comparable rates for open access for all retail electric utilities offering customer choice, and PURA Chapter 17, Subchapters A and C, which deal, respectively, with general provisions relating to customer protection policy and the retail customer's right to choice.

Cross Reference to Statutes: PURA §§14.002, 36.001, 36.003, 39.101, 39.102, 39.203 and Chapter 17, Subchapters A and C.

§25.474.Selection of Retail Electric Provider.

(a) Applicability. This section applies to retail electric providers (REPs) and aggregators seeking to enroll applicants or customers for retail electric service. In addition, where specifically stated, this section applies to transmission and distribution utilities (TDUs) and the registration agent.

(b) Purpose. The provisions of this section establish procedures for enrollment of applicants or customers by a REP and ensure that all applicants and customers in this state are protected from an unauthorized switch from the applicant's or customer's REP of choice or an unauthorized move-in. A contested switch in providers shall be presumed to be unauthorized unless the REP provides proof, in accordance with the requirements of this section, of the applicant's or customer's authorization and verification.

(c) Initial REP selection process.

(1) In conjunction with the commission's customer education campaign, the commission may issue to customers for whom customer choice will be available an explanation of the REP selection process. The customer education information issued by the commission may include, but is not limited to:

(A) an explanation of retail electric competition;

(B) a list of all REPs certified to provide electric service to the customer;

(C) a form that allows the customer to contact or select one or more of the listed REPs from which the customer desires to receive information or to be contacted; and

(D) information on how a customer may designate whether the customer would like to be placed on the statewide Do Not Call List and indicate the fee for such placement.

(2) Any affiliated REP assigned to serve a customer that is entitled to receive the price-to-beat rate, pursuant to the Public Utility Regulatory Act (PURA) §39.202(a), shall issue to a customer, either as a bill insert or through a separate mailing, no later than 30 days after the commencement of customer choice:

(A) A terms of service document that includes an explanation of the price-to-beat rate;

(B) Your Rights as a Customer disclosure; and

(C) An Electricity Facts Label for the price to beat, which may, at the discretion of the REP, be in a separate document or contained in the terms of service document.

(3) An electric utility whose successor affiliated REP will continue to serve customers not eligible for the price-to-beat rate, pursuant to PURA §39.102(b), shall issue to the customer a terms of service document on a date prescribed by the commission. Such a document shall contain an explanation of the price the customer will be charged by the affiliated REP.

(d) Enrollment via the Internet. For enrollments of applicants via the Internet, a REP or aggregator shall obtain authorization and verification of the move-in or switch request from the applicant in accordance with this subsection.

(1) The website (or websites) shall clearly and conspicuously identify the legal name of the aggregator and its registration number to provide aggregation services or REP and its certification number to sell retail electric service, its address, and telephone number;

(2) The website shall include a means of transfer of information, such as electronic enrollment, renewal, and cancellation information between the applicant or customer and the REP or aggregator that is an encrypted transaction using Secure Socket Layer or similar encryption standard to ensure the privacy of customer information;

(3) The website shall include an explanation that a move-in or a switch can only be made by the electric service applicant or the applicant's authorized agent;

(4) The entire enrollment process shall be in plain, easily understood language. The entire enrollment shall be the same language. Nothing in this section is meant to prohibit REPs or aggregators from utilizing multiple enrollment procedures or websites to conduct enrollments in multiple languages.

(5) Required authorization disclosures. Prior to requesting confirmation of the move-in or switch request, a REP or aggregator shall clearly and conspicuously disclose the following information:

(A) the name of the new REP;

(B) the name of the specific electric service package or plan for which the applicant's assent is attained;

(C) the ability of an applicant to select to receive information in English, Spanish, or the language used in the marketing of service to the applicant. The REP or aggregator shall provide a means of documenting a customer's language preference;

(D) the price of the product or plan, including the total price stated in cents per kilowatt-hour, for electric service;

(E) term or length of the term of service;

(F) the presence or absence of early termination fees or penalties, and applicable amounts;

(G) any requirement to pay a deposit and the estimated amount of that deposit, or the method in which the deposit will be calculated. An affiliated REP or provider of last resort (POLR) shall also notify the applicant of the right to post a letter of guarantee in lieu of a deposit in accordance with §25.478(i) of this title (relating to Credit Requirements and Deposits);

(H) any fees to the applicant for switching to the REP pursuant to subsection (n) of this section;

(I) in the case of a switch request, the applicant's right, pursuant to subsection (j) of this section, to review and rescind the terms of service within three federal business days, after receiving the terms of service, without penalty; and

(J) a statement that the applicant will receive a copy of the terms of service document via email or, upon request, via regular US mail, that will explain all the terms of the agreement and how to exercise the right of rescission, if applicable.

(6) The applicant shall be required to check a box affirming that the applicant has read and understands the disclosures and terms of service required by paragraph (5) of this subsection.

(7) The REP or aggregator shall provide access to the complete terms of service document that is being agreed to by the applicant on the website such that the applicant may review the terms of service prior to enrollment. A prompt shall also be provided for the applicant to print or save the terms of service document to which the applicant assents, and shall inform the application of the option to request that a written copy of the terms of service document be sent by regular U.S. mail by contacting the REP.

(8) The REP or aggregator shall also provide a toll-free telephone number, Internet website address, and e-mail address for contacting the REP or aggregator throughout the duration of the applicant's or customer's agreement. The REP or aggregator shall also provide the appropriate toll-free telephone number that the customer can use to report service outages.

(9) Applicant authorizations shall adhere to any state and federal guidelines governing the use of electronic signatures.

(10) Verification of authorization for Internet enrollment. Prior to final verification by the applicant of enrollment with the REP or aggregator, the REP or aggregator shall:

(A) obtain or confirm the applicant's email address, billing name, billing address, service address, and name of any authorized representative;

(B) obtain or confirm the applicant's electric service identifier (ESI-ID), if available;

(C) affirmatively inquire whether the applicant has decided to establish new service or change from the current REP to the new REP;

(D) affirmatively inquire whether the applicant designates the new REP to perform the necessary tasks to complete a switch or move in for the applicant's service with the new REP; and

(E) obtain or confirm one of the following account access verification data: last four digits of the social security number, mother's maiden name, city or town of birth, month and day of birth, driver's license or government issued identification number. For non-residential applicants, the REP may obtain the applicant's federal tax identification number.

(11) After enrollment, the REP or aggregator shall send a confirmation, by email, of the applicant's request to select the REP. The confirmation email shall include:

(A) in the case of a switch, a clear and conspicuous notice of the applicant's right, pursuant to subsection (j) of this section, to review and rescind the terms of service within three federal business days, after receiving the terms of service without penalty and offer the applicant the option of exercising this right by toll-free number, email, Internet website, facsimile transmission or regular mail. This notice shall be accessible to the applicant without need to open an attachment or link to any other document; and

(B) the terms of service and Your Rights as a Customer documents. These may be documents attached to the confirmation email, or the REP or aggregator may include a link to an Internet webpage containing the documents.

(e) Written enrollment. For enrollments of customers via a written letter of authorization (LOA), a REP or aggregator shall obtain authorization and verification of the switch or move-in request from the applicant in accordance with this subsection.

(1) All LOAs for move-in or switch orders shall be in plain, easily understood language. The entire enrollment shall be in the same language.

(2) The LOA shall be a separate or easily separable document containing the requirements prescribed by this subsection for the sole purpose of authorizing the REP to initiate a switch request. The LOA is not valid unless it is signed and dated by the customer requesting the move-in or switch.

(3) The LOA may contain a description of inducements associated with enrolling with the REP; however, the actual inducement itself shall not be either included on or as part of the LOA, or constitute the LOA by itself;

(4) The LOA shall be legible and shall contain clear and unambiguous language;

(5) Required authorization disclosures. The LOA shall disclose the following information:

(A) the name of the new REP;

(B) the name of the specific electric service package or plan for which the applicant's assent is attained;

(C) the ability of an applicant to select to receive information in English, Spanish, or the language used in the marketing of service to the applicant. The REP shall provide a means of documenting an applicant's language preference;

(D) the price of the product or plan, including the total price stated in cents per kilowatt-hour, for electric service;

(E) term or length of the term of service;

(F) the presence or absence of early termination fees or penalties, and applicable amounts;

(G) any requirement to pay a deposit and the estimated amount of that deposit, or the method in which the deposit will be calculated. An affiliated REP or POLR shall also notify the applicant of the right to post a letter of guarantee in lieu of a deposit in accordance with §25.478(i) of this title;

(H) any fees to the applicant for switching to the REP pursuant to subsection (n) of this section;

(I) in the case of a switch, the applicant's right, pursuant to subsection (j) of this section, to review and rescind the terms of service within three federal business days, after receiving the terms of service, without penalty; and

(J) a statement that the applicant will receive a written copy of the terms of service document that will explain all the terms of the agreement and how to exercise the right of rescission, if applicable.

(6) Verification of authorization of written enrollment. A REP or aggregator shall, as part of the LOA:

(A) obtain or confirm the applicant's billing name, billing address, and service address;

(B) obtain or confirm the applicant's ESI-ID, if available;

(C) affirmatively inquire whether the applicant has decided to establish new service or change from their current REP to the new REP;

(D) affirmatively inquire whether the applicant designates the new REP to perform the necessary tasks to complete a switch or move in for the applicant's service with the new REP; and

(E) obtain one of the following account access verification data: last four digits of the social security number, mother's maiden name, city or town of birth, month and day of birth, driver's license or government issued identification number. For non-residential applicants, the REP may obtain the applicant's federal tax identification number.

(7) The following LOA form meets the requirements of this subsection if modified as appropriate for the requirements of paragraph (5)(G) of this subsection. Other versions may be used, but shall contain all the information and disclosures required by this subsection.

Figure: 16 TAC §25.474(e)(7) (No change.)

(8) Before obtaining a signature from a customer, a REP shall:

(A) provide to the applicant a reasonable opportunity to read the terms of service, Electricity Facts Label, and any written materials accompanying the terms of service document; and

(B) answer any questions posed by any applicant about information contained in the documents.

(9) Upon obtaining the applicant's signature, a REP or aggregator shall immediately provide the applicant a legible copy of the signed LOA, and shall distribute or mail the terms of service document, Electricity Facts Label, and Your Rights as a Customer disclosure. If a written solicitation by a REP contains the terms of service document, any tear-off portion that is submitted by the applicant to the REP to obtain electric service shall allow the applicant to retain the terms of service document.

(10) The applicant's signature on the LOA shall constitute an authorization of the move-in or switch request if the LOA complies with the provisions of this section and the terms of service comply with the requirements of §25.475(d) of this title (relating to Information Disclosures to Residential and Small Commercial Customers).

(f) Enrollment via door-to-door sales. A REP or aggregator that engages in door-to-door marketing at a customer's residence shall comply with the following requirements:

(1) Solicitation requirements. A REP or aggregator that engages in door-to-door marketing at an applicant's residence shall comply with the following requirements:

(A) The REP or aggregator shall provide the disclosures required by this section and the three-day right of rescission required by the Federal Trade Commission's Trade Regulation Rule Concerning a Cooling Off Period for Door-to-Door Sales (16 C.F.R. §429).

(B) The individual who represents the REP or aggregator shall wear a clear and conspicuous identification of the REP or aggregator on the front of the individual's outer clothing or on an identification badge worn by the individual. In addition, the individual shall wear an identification badge that includes the individual's name and photograph, the REP or aggregator's certification or registration number, and a toll-free telephone number maintained by the REP or aggregator that the applicant may call to verify the door-to-door representative's identity during specified business hours. The company name displayed shall conform to the name on the REP's certification or aggregator's registration obtained from the commission and the name that appears on all of the REP's or aggregator's contracts and terms of service documents in possession of the individual.

(C) The REP or aggregator shall affirmatively state that it is not a representative of the applicant's transmission and distribution utility or any other REP or aggregator. The REP's or aggregator's clothing and sales presentation shall be designed to avoid the impression by a reasonable person that the individual represents the applicant's transmission and distribution utility or any other REP or aggregator.

(D) The REP or aggregator shall not represent that an applicant or customer is required to switch service in order to continue to receive power.

(E) Door-to-door representatives shall adhere to all local city/subdivision guidelines concerning door-to-door solicitation.

(2) Required authorization disclosures. Prior to requesting verification of the applicant's authorization to enroll, a REP or aggregator shall comply with all of the authorization disclosure requirements in either subsections (e)(5) or (h)(1) through (h)(4) of this section.

(3) Verification of authorization for door-to-door enrollment. A REP, or an independent third party retained by the REP, shall telephonically obtain and record all required verification information from the applicant to verify the applicant's decision to enroll with the REP in accordance with this paragraph.

(A) Electronically record on audiotape, a wave sound file, or other recording device the entirety of an applicant's verification. The verification call shall comply with the requirements in subsection (h)(5) of this subsection.

(B) Inform the applicant that the verification of authorization call is being recorded.

(C) Verification shall be conducted in the same language as that used in the sales transaction and authorization.

(D) Automated systems shall provide the applicant with the option of exiting the system and nullifying the enrollment at any time during the call.

(E) A REP or its sales representative initiating a three-way call or a call through an automated verification system shall not participate in the verification process.

(F) The REP shall not submit a move-in or switch request until it has obtained a recorded telephonic verification of the enrollment.

(G) If a REP has solicited service for prepaid service, an actual pre-payment by a customer may be substituted for a telephonic verification, provided that the pre-payment is not taken at the time of the solicitation by the sales representative that has obtained the authorization from the customer, and the REP has obtained a written LOA from the customer and can produce documentation of the pre-payment. The REP shall not submit a move-in or switch request until it has received the prepayment from the customer.

(g) Personal solicitations other than door-to-door marketing. A REP or aggregator that engages in personal solicitation at a location other than a customer's residence (such as malls, fairs, or places of business) shall comply with all requirements for written enrollments and LOA requirements detailed in subsection (e) of this section. In addition, the REP or aggregator shall comply with the following additional requirements:

(1) For solicitations of residential customers, the individual who represents the REP or aggregator shall wear a clear and conspicuous identification of the REP or aggregator on the front of the individual's outer clothing or on an identification badge worn by the individual. The company name displayed shall conform to the name on the REP's certification or aggregator's registration obtained from the commission and the name that appears on all of the REP's or aggregator's contracts and terms of service documents in possession of the individual.

(2) The individual who represents the REP or aggregator shall not state or imply that it is a representative of the customer's transmission and distribution utility or any other REP or aggregator. The REP's or aggregator's clothing and sales presentation shall be designed to avoid the impression by a reasonable person that the individual represents the applicant's transmission and distribution utility or any other REP or aggregator.

(3) The REP or aggregator shall not represent that an applicant is required to switch service in order to continue to receive power.

(h) Telephonic enrollment. For enrollments of applicants via telephone solicitation, a REP or aggregator shall obtain authorization and verification of the move-in or switch request from the applicant in accordance with this subsection.

(1) A REP or aggregator shall electronically record on audio tape, a wave sound file, or other recording device the entirety of an applicant's authorization and verification. Automated systems shall provide the customers with either the option of speaking to a live person at any time during the call, or the option to exit the call and cancel the enrollment.

(2) The REP or aggregator shall inform the customer that the authorization and verification portions of the call are being recorded.

(3) Authorizations and verifications shall be conducted in the same language as that used in the sales transaction.

(4) Required authorization disclosures. Prior to requesting verification of the move-in or switch request, a REP or aggregator shall clearly and conspicuously disclose the following information:

(A) the name of the new REP;

(B) the name of the specific electric service package or plan for which the applicant's assent is attained;

(C) the price of the product or plan, including the total price stated in cents per kilowatt-hour, for electric service;

(D) term or length of the term of service;

(E) the presence or absence of early termination fees or penalties, and applicable amounts;

(F) any requirement to pay a deposit and the estimated amount of that deposit, or the method in which the deposit will be calculated or the method in which the deposit will be calculated. An affiliated REP or POLR shall also notify the applicant of the right to post a letter of guarantee in lieu of a deposit in accordance with §25.478(i) of this title;

(G) any fees to the applicant for switching to the REP pursuant to subsection (n) of this section;

(H) in the case of a switch, the applicant's right, pursuant to subsection (j) of this section, to review and rescind the terms of service within three federal business days, after receiving the terms of service, without penalty; and

(I) a statement that the applicant will receive a written copy of the terms of service document that will explain all the terms of the agreement and how to exercise the right of rescission, if applicable.

(5) Verification of authorization of telephonic enrollment.

(A) A REP or aggregator shall electronically record on audio tape, a wave sound file, or other recording device the entirety of an applicant's verification of the authorization. The REP or aggregator shall inform the applicant that the verification call is being recorded.

(B) Prior to final confirmation by the applicant that they wish to enroll with the REP, the REP shall, at a minimum:

(i) obtain or confirm the applicant's billing name, billing address, and service address;

(ii) obtain or confirm the applicant's ESI-ID, if available;

(iii) for a move-in request, ask the applicant, "do you agree to become a customer with (REP) and allow (REP) to complete the tasks required to start your electric service?" and the applicant must answer affirmatively; or

(iv) for a switch request, ask the applicant, "do you agree to become a (REP) customer and allow us to complete the tasks required to switch your electric service from your current REP to (REP)?" and the applicant must answer affirmatively; and

(v) ask the applicant, "do you want to receive information in English, Spanish (or the language used in the marketing of service to the applicant)?" The REP shall provide a means of documenting the applicant's language preference; and

(vi) obtain or confirm one of the following account access verification data: last four digits of the social security number, mother's maiden name, city or town of birth, or month and day of birth, driver's license or government issued identification number. For non-residential applicants, a REP may obtain the applicant's federal tax identification number.

(C) In the event the applicant does not consent to or does not provide any of the information listed in subparagraph (B) of this paragraph, the enrollment shall be deemed invalid and the REP shall not submit a switch or move-in request for the applicant's service.

(D) If a REP has solicited service for prepaid service, an actual pre-payment by a customer may be substituted for a telephonic verification, provided that the pre-payment is not taken at the time of the solicitation by the sales representative that has obtained the authorization from the customer, and the REP has obtained a written LOA from the customer and can produce documentation of the pre-payment. The REP shall not submit a move-in or switch request until it has received the prepayment from the customer.

(i) Record retention.

(1) A REP or aggregator shall maintain non-public records of each applicant's authorization and verification of enrollment for 24 months from the date of the REP's initial enrollment of the applicant and shall provide such records to the applicant, customer, or commission staff, upon request.

(2) A REP or an aggregator shall submit copies of its sales script, terms of service document, and any other materials used to obtain a customer's authorization or verification to the commission staff upon request. In the event commission staff request documents under this subsection, the requested records must be delivered to the commission staff within 15 days of the written request, unless otherwise agreed to by commission staff.

(3) In the event an applicant or customer disputes an enrollment or switch, the REP shall provide to the applicant or customer proof of the applicant's or customer's authorization within five business days of the request.

(j) Right of rescission. A REP shall promptly provide the applicant with the terms of service document after the applicant has authorized the REP to provide service to the applicant and the authorization has been verified. For switch requests, the REP shall offer the applicant a right to rescind the terms of service without penalty or fee of any kind for a period of three federal business days after the applicant's receipt of the terms of service document. The provider may assume that any delivery of the terms of service document deposited first class with the United States Postal Service will be received by the applicant within three federal business days. Any REP receiving an untimely notice of rescission from the applicant shall inform the applicant that the applicant has a right to select another REP and may do so by contacting that REP. The REP shall also inform the applicant that the applicant will be responsible for charges from the REP for service provided until the applicant switches to another REP. The right of rescission is not applicable to an applicant requesting a move-in.

(k) Submission of an applicant's switch or move-in request to the registration agent. A REP shall submit a move-in or switch request to the registration agent so that the move-in or switch will be processed on the approximate scheduled date agreed to by the applicant and as allowed by the tariff of the TDU, municipally owned utility, or electric cooperative. A REP shall submit an applicant's switch request to the registration agent as a standard switch. In the alternative, the REP shall submit an applicant's switch request as a self-selected switch if the applicant requests a specific date for a switch, consistent with the applicable transmission and distribution tariff. A REP may submit an applicant's switch request to the registration agent prior to the expiration of the rescission period prescribed by subsection (j) of this section, provided that if the customer makes a timely request to cancel service the REP shall take action to ensure that the switch is canceled or the customer is promptly returned to its chosen REP without inconvenience or additional cost to the customer. The applicant shall be informed of the approximate scheduled date that the applicant will begin receiving electric service from the REP, and of any delays in meeting that date, if known by the REP.

(l) Duty of the registration agent.

(1) When the registration agent receives a move-in or switch request from a REP, the registration agent shall process that request in accordance with this section and its protocols, to the extent that the protocols are consistent with this section. The registration agent shall send a switch notification notice to the applicant that shall:

(A) be worded in English and Spanish consistent with §25.473(d) of this title (relating to Non-English Language Requirements);

(B) identify the REP that initiated the switch request; and,

(C) provide the names and telephone numbers for the gaining and losing REP.

(2) The registration agent shall direct the TDU to implement any switch, move-in, or transfer to the REP or the POLR in accordance with this section and its protocols.

(m) Exemptions for certain transfers. The provisions of this section relating to authorization and right of rescission are not applicable when the applicant's or customer's electric service is:

(1) transferred to the POLR pursuant to §25.43 of this title (relating to Provider of Last Resort (POLR)) when the customer's REP of record defaults or otherwise ceases to provide service. Nothing in this subsection implies that the customer is accepting a contract with the POLR for a specific term;

(2) transferred to the competitive affiliate of the POLR pursuant to §25.43(o) of this title;

(3) transferred to another REP in accordance with section §25.493 of this title (relating to Acquisition and Transfer of Customers from One Retail Electric Provider to Another); or

(4) transferred from one premise to another premise without a change in REP and without a material change in the terms of service.

(n) Fees. A REP, other than a municipally owned utility or an electric cooperative, shall not charge a fee to an applicant to switch to, select, or enroll with the REP unless the applicant requests an out-of-cycle meter read for the purpose of a self-selected switch. The registration agent shall not charge a fee to the end-use customer for the switch or enrollment process performed by the registration agent. The TDU shall not charge a fee for a review or adjustment described in subsection (q)(2) of this section. To the extent that the TDU assesses a REP a properly tariffed charge for connection of service, out-of-cycle meter read for self-selected switch requests, service order cancellations, or changes associated with the switching of service or the establishment of new service, any such fee may be passed on to the applicant or customer by the REP. A TDU shall not assess to a REP or an applicant any costs associated with a switch cancellation, including inadvertent gain fees, that results from the applicant's exercise of the three-day right of rescission. The TDU shall include such costs in the cost recovery mechanism described in subsection (p) of this section.

(o) Use of actual meter read for the purpose of a switch.

(1) If an actual meter read occurs during the four business days beginning with the first available switch date determined by the registration agent, the TDU shall use that actual meter read for the purpose of completing a standard switch.

(2) If an actual meter read occurred during the three business days prior to the first available switch date determined by the registration agent, the TDU shall use that actual meter read for the purpose of completing a standard switch.

(p) TDU cost recovery. The TDU may recover the reasonable costs associated with performing meter reads for purposes of a standard switch through one of the following two options at the TDU's discretion:

(1) TDU costs associated with performing standard meter reads for the purpose of switches, to the extent not reflected in base rates, shall be considered costs incurred in deploying advanced metering functionality and are to be considered in setting a surcharge established under PURA §39.107(h) and §25.130 of this title (relating to Advanced Metering). The costs shall be included in the annual reports filed pursuant to §25.130(k)(5) of this title as actual costs spent to date in the deployment of Advanced Metering Systems (AMS) and shall be considered in setting, reconciling and or updating the AMS surcharge pursuant to §25.130(k) of this title; or,

(2) a TDU shall create a regulatory asset for the expenses associated with performing standard meter reads for the purpose of switches pursuant to this subsection. Upon review of reasonableness and necessity, a reasonable level of amortization of such a regulatory asset, including carrying charges, shall be included as a recoverable cost in the TDU's rates in its next rate case or such other rate recovery proceeding as deemed necessary.

(q) Meter reads for the purpose of a standard switch.

(1) Beginning December 1, 2009, a TDU shall perform actual, as opposed to estimated, meter reads for at least 80% of meter reads for the purpose of a standard switch in any given month, and at least 95% of meter reads for the purpose of a standard switch in any calendar year, exclusive of remote meter reads using advanced meters. Until December 1, 2009, a TDU may perform estimated meter reads for standard switch requests only for residential customers, exclusive of customers with meters that have remote read capability. A TDU shall use best efforts to perform as many actual reads as possible for standard switches.

(2) Notwithstanding §25.214 of this title (relating to Terms and Conditions of Retail Delivery Service Provided by Investor Owned Transmission and Distribution Utilities), an estimated meter read for the purpose of a standard switch is not subject to adjustment, except as provided in subparagraph (A) or (B) of this paragraph. A customer is obligated to pay a bill based upon an estimated meter read for the purpose of a switch, including any adjustment made pursuant to subparagraph (A) or (B) of this paragraph.

(A) The TDU shall adjust the estimated meter read if the losing REP's billed usage is greater than the total kilowatt-hours used by the customer in the TDU monthly meter read cycle during which the estimate was made.

(B) Only upon the receipt of a customer dispute of the estimated usage to either the gaining or losing REP, either REP may request the TDU to review the estimate. In reviewing the estimate, the TDU shall promptly calculate the average actual kWh usage per day for the time period from the actual meter reading occurring prior to the estimated reading to the actual meter reading occurring after the estimated reading. The TDU shall determine whether the usage per day for the estimated period prior to the switch is at least 25% greater than, or 25% less than, the average actual kWh usage per day. If so, the TDU shall promptly adjust the estimated meter read. The TDU may adjust an estimate that does not meet this 25% threshold, on a non-discriminatory basis.

(C) The TDU shall apply a reasonable methodology in making adjustments pursuant to subparagraphs (A) and (B) of this paragraph and shall make the methodology available to REPs. Consistent with any meter read adjustments, the TDU shall adjust its invoices to the affected REP or REPs.

(3) A TDU shall file performance reports with the commission as part of the information filed under §25.88 of this title (relating to Retail Market Performance Measure Reporting). These reports shall show by month the number and percentages of actual and estimated meter reads for the purpose of switches, and whether that month's performance was in compliance with paragraph (1) of this subsection.

(r) Scheduled switch date. Once a TDU notifies the REPs of a scheduled switch date, the TDU shall perform an actual or estimated read of the customer's meter for that date.

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 15, 2009.

TRD-200902422

Adriana A. Gonzales

Rules Coordinator

Public Utility Commission of Texas

Effective date: July 5, 2009

Proposal publication date: February 13, 2009

For further information, please call: (512) 936-7223

CHAPTER 55. RULES FOR ADMINISTRATIVE SERVICES

The Texas Commission of Licensing and Regulation ("Commission") adopts new rules at 16 Texas Administrative Code ("TAC") Chapter 55, §§55.1, 55.10, 55.20, 55.30, 55.40, 55.50 - 55.61, and 55.70 - 55.82, regarding administrative services rules related to the Texas Department of Licensing and Regulation ("Department"). The new rules are adopted without changes to the proposed text as published in the March 6, 2009, issue of the Texas Register (34 TexReg 1518) and will not be republished. The new rules take effect July 1, 2009.

The former rules at 16 TAC Chapter 60 implemented the statutory requirements under Texas Occupations Code, Chapter 51, the enabling statute for the Commission and the Department. As the result of a rule review conducted in accordance with Texas Government Code §2001.039 (see the October 10, 2008, issue of the Texas Register (33 TexReg 8562)), the Department proposed that the former rules be repealed and replaced with two new rule chapters, Chapters 55 and 60.

The Department has determined that these changes are necessary to ensure that the rules: (1) include and accurately reflect all of the requirements of Texas Occupations Code, Chapter 51 and other statutes affecting state agencies; (2) reflect the Commission's and the Department's current policies, procedures and practices; and (3) do not contain provisions that are more appropriately located elsewhere, such as an employee handbook. In addition, the Department has determined that the new rule structure and format will be more user-friendly since similar activities and responsibilities have been grouped together.

New Chapter 55 is adopted in conjunction with the repeal of the former rules at 16 TAC Chapter 60 and the adoption of new rules in Chapter 60, which are published in the Adopted Rules section of this issue of the Texas Register.

New Chapter 55 has five subchapters and addresses administrative services issues involving the Department including procurements, contracts, and contract disputes with vendors. The new rules include many of the provisions found in the former Chapter 60 rules.

Subchapter A states the statutory authority for adopting rules and provides definitions used in the chapter. Subchapter B sets out the Department's processes for procuring goods and services. Subchapter C sets out the procedures for potential vendors to protest the procurement processes and/or awards. Subchapters D and E set out the Department's rules for handling contract disputes with current vendors and resolving those disputes through negotiation and mediation, respectively. Subchapters D and E reflect the model rules developed by the Texas Attorney General and the State Office of Administrative Hearings for use by state agencies.

The proposed rules were published in the Texas Register on March 6, 2009, for a 30-day public comment period. The Department did not receive any public comments on the proposed rules.

SUBCHAPTER A. GENERAL PROVISIONS

16 TAC §55.1, §55.10

The new rules are adopted as a result of the rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted under Texas Government Code, Chapter 2156, which requires state agencies making purchases to adopt the Texas Comptroller of Public Accounts' rules related to bid opening and tabulation; Texas Government Code, Chapter 2161, which requires a state agency to adopt the Texas Comptroller of Public Accounts' rules as the agency's own rules for construction projects and purchases of goods and services; and Texas Government Code, Chapter 2260, which requires each state agency to develop rules to address contract disputes with vendors and to resolve those disputes through negotiation and/or mediation. Finally, the new rules are adopted in accordance with Texas Government Code, Chapters 552 and 2009; and Texas Civil Practice and Remedies Code, Chapters 107 and 154.

The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51, the Commission's and Department's enabling statute. In addition, the following statutes establishing specific programs regulated by the Department are affected: Texas Agriculture Code, Chapters 301 and 302 (Weather Modification and Control); Texas Business and Commerce Code, Chapter 92 (Rental Purchase Agreements-Loss Damage Waivers); Texas Government Code, Chapters 57 (Licensed Court Interpreters) and 469 (Architectural Barriers); Texas Health and Safety Code, Chapters 76 (Discount Health Care Programs), 754 (Elevators and Escalators), and 755 (Boilers); Texas Labor Code, Chapters 91 (Staff Leasing Services) and 92 (Temporary Common Worker Employers); and Texas Occupations Code, Chapters 953 (For Profit Legal Service Contract Companies), 1152 (Property Tax Consultants), 1202 (Industrialized Housing and Buildings), 1302 (Air Conditioning and Refrigeration Contractors and Technicians), 1304 (Service Contract Providers and Administrators), 1305 (Electricians), 1601 (Barbers), 1602 (Cosmetology), 1802 (Auctioneers), 1901 (Water Well Drillers), 1902 (Water Well Pump Installers), 2052 (Combative Sports), 2105 (Talent Agencies), 2303 (Vehicle Storage Facilities), 2306 (Vehicle Protection Product Warrantors), 2308 (Tow Trucks and Operators), and 2501 (Personnel Employment Services). No other statutes, articles, or codes are affected by the adoption.

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 11, 2009.

TRD-200902340

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §55.20, §55.30

The new rules are adopted as a result of the rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted under Texas Government Code, Chapter 2156, which requires state agencies making purchases to adopt the Texas Comptroller of Public Accounts' rules related to bid opening and tabulation; Texas Government Code, Chapter 2161, which requires a state agency to adopt the Texas Comptroller of Public Accounts' rules as the agency's own rules for construction projects and purchases of goods and services; and Texas Government Code, Chapter 2260, which requires each state agency to develop rules to address contract disputes with vendors and to resolve those disputes through negotiation and/or mediation. Finally, the new rules are adopted in accordance with Texas Government Code, Chapters 552 and 2009; and Texas Civil Practice and Remedies Code, Chapters 107 and 154.

The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51, the Commission's and Department's enabling statute. In addition, the following statutes establishing specific programs regulated by the Department are affected: Texas Agriculture Code, Chapters 301 and 302 (Weather Modification and Control); Texas Business and Commerce Code, Chapter 92 (Rental Purchase Agreements-Loss Damage Waivers); Texas Government Code, Chapters 57 (Licensed Court Interpreters) and 469 (Architectural Barriers); Texas Health and Safety Code, Chapters 76 (Discount Health Care Programs), 754 (Elevators and Escalators), and 755 (Boilers); Texas Labor Code, Chapters 91 (Staff Leasing Services) and 92 (Temporary Common Worker Employers); and Texas Occupations Code, Chapters 953 (For Profit Legal Service Contract Companies), 1152 (Property Tax Consultants), 1202 (Industrialized Housing and Buildings), 1302 (Air Conditioning and Refrigeration Contractors and Technicians), 1304 (Service Contract Providers and Administrators), 1305 (Electricians), 1601 (Barbers), 1602 (Cosmetology), 1802 (Auctioneers), 1901 (Water Well Drillers), 1902 (Water Well Pump Installers), 2052 (Combative Sports), 2105 (Talent Agencies), 2303 (Vehicle Storage Facilities), 2306 (Vehicle Protection Product Warrantors), 2308 (Tow Trucks and Operators), and 2501 (Personnel Employment Services). No other statutes, articles, or codes are affected by the adoption.

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 11, 2009.

TRD-200902341

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §55.40

The new rules are adopted as a result of the rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted under Texas Government Code, Chapter 2156, which requires state agencies making purchases to adopt the Texas Comptroller of Public Accounts' rules related to bid opening and tabulation; Texas Government Code, Chapter 2161, which requires a state agency to adopt the Texas Comptroller of Public Accounts' rules as the agency's own rules for construction projects and purchases of goods and services; and Texas Government Code, Chapter 2260, which requires each state agency to develop rules to address contract disputes with vendors and to resolve those disputes through negotiation and/or mediation. Finally, the new rules are adopted in accordance with Texas Government Code, Chapters 552 and 2009; and Texas Civil Practice and Remedies Code, Chapters 107 and 154.

The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51, the Commission's and Department's enabling statute. In addition, the following statutes establishing specific programs regulated by the Department are affected: Texas Agriculture Code, Chapters 301 and 302 (Weather Modification and Control); Texas Business and Commerce Code, Chapter 92 (Rental Purchase Agreements-Loss Damage Waivers); Texas Government Code, Chapters 57 (Licensed Court Interpreters) and 469 (Architectural Barriers); Texas Health and Safety Code, Chapters 76 (Discount Health Care Programs), 754 (Elevators and Escalators), and 755 (Boilers); Texas Labor Code, Chapters 91 (Staff Leasing Services) and 92 (Temporary Common Worker Employers); and Texas Occupations Code, Chapters 953 (For Profit Legal Service Contract Companies), 1152 (Property Tax Consultants), 1202 (Industrialized Housing and Buildings), 1302 (Air Conditioning and Refrigeration Contractors and Technicians), 1304 (Service Contract Providers and Administrators), 1305 (Electricians), 1601 (Barbers), 1602 (Cosmetology), 1802 (Auctioneers), 1901 (Water Well Drillers), 1902 (Water Well Pump Installers), 2052 (Combative Sports), 2105 (Talent Agencies), 2303 (Vehicle Storage Facilities), 2306 (Vehicle Protection Product Warrantors), 2308 (Tow Trucks and Operators), and 2501 (Personnel Employment Services). No other statutes, articles, or codes are affected by the adoption.

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 11, 2009.

TRD-200902342

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§55.50 - 55.61

The new rules are adopted as a result of the rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted under Texas Government Code, Chapter 2156, which requires state agencies making purchases to adopt the Texas Comptroller of Public Accounts' rules related to bid opening and tabulation; Texas Government Code, Chapter 2161, which requires a state agency to adopt the Texas Comptroller of Public Accounts' rules as the agency's own rules for construction projects and purchases of goods and services; and Texas Government Code, Chapter 2260, which requires each state agency to develop rules to address contract disputes with vendors and to resolve those disputes through negotiation and/or mediation. Finally, the new rules are adopted in accordance with Texas Government Code, Chapters 552 and 2009; and Texas Civil Practice and Remedies Code, Chapters 107 and 154.

The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51, the Commission's and Department's enabling statute. In addition, the following statutes establishing specific programs regulated by the Department are affected: Texas Agriculture Code, Chapters 301 and 302 (Weather Modification and Control); Texas Business and Commerce Code, Chapter 92 (Rental Purchase Agreements-Loss Damage Waivers); Texas Government Code, Chapters 57 (Licensed Court Interpreters) and 469 (Architectural Barriers); Texas Health and Safety Code, Chapters 76 (Discount Health Care Programs), 754 (Elevators and Escalators), and 755 (Boilers); Texas Labor Code, Chapters 91 (Staff Leasing Services) and 92 (Temporary Common Worker Employers); and Texas Occupations Code, Chapters 953 (For Profit Legal Service Contract Companies), 1152 (Property Tax Consultants), 1202 (Industrialized Housing and Buildings), 1302 (Air Conditioning and Refrigeration Contractors and Technicians), 1304 (Service Contract Providers and Administrators), 1305 (Electricians), 1601 (Barbers), 1602 (Cosmetology), 1802 (Auctioneers), 1901 (Water Well Drillers), 1902 (Water Well Pump Installers), 2052 (Combative Sports), 2105 (Talent Agencies), 2303 (Vehicle Storage Facilities), 2306 (Vehicle Protection Product Warrantors), 2308 (Tow Trucks and Operators), and 2501 (Personnel Employment Services). No other statutes, articles, or codes are affected by the adoption.

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 11, 2009.

TRD-200902343

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§55.70 - 55.82

The new rules are adopted as a result of the rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted under Texas Government Code, Chapter 2156, which requires state agencies making purchases to adopt the Texas Comptroller of Public Accounts' rules related to bid opening and tabulation; Texas Government Code, Chapter 2161, which requires a state agency to adopt the Texas Comptroller of Public Accounts' rules as the agency's own rules for construction projects and purchases of goods and services; and Texas Government Code, Chapter 2260, which requires each state agency to develop rules to address contract disputes with vendors and to resolve those disputes through negotiation and/or mediation. Finally, the new rules are adopted in accordance with Texas Government Code, Chapters 552 and 2009; and Texas Civil Practice and Remedies Code, Chapters 107 and 154.

The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51, the Commission's and Department's enabling statute. In addition, the following statutes establishing specific programs regulated by the Department are affected: Texas Agriculture Code, Chapters 301 and 302 (Weather Modification and Control); Texas Business and Commerce Code, Chapter 92 (Rental Purchase Agreements-Loss Damage Waivers); Texas Government Code, Chapters 57 (Licensed Court Interpreters) and 469 (Architectural Barriers); Texas Health and Safety Code, Chapters 76 (Discount Health Care Programs), 754 (Elevators and Escalators), and 755 (Boilers); Texas Labor Code, Chapters 91 (Staff Leasing Services) and 92 (Temporary Common Worker Employers); and Texas Occupations Code, Chapters 953 (For Profit Legal Service Contract Companies), 1152 (Property Tax Consultants), 1202 (Industrialized Housing and Buildings), 1302 (Air Conditioning and Refrigeration Contractors and Technicians), 1304 (Service Contract Providers and Administrators), 1305 (Electricians), 1601 (Barbers), 1602 (Cosmetology), 1802 (Auctioneers), 1901 (Water Well Drillers), 1902 (Water Well Pump Installers), 2052 (Combative Sports), 2105 (Talent Agencies), 2303 (Vehicle Storage Facilities), 2306 (Vehicle Protection Product Warrantors), 2308 (Tow Trucks and Operators), and 2501 (Personnel Employment Services). No other statutes, articles, or codes are affected by the adoption.

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 11, 2009.

TRD-200902344

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§58.1, 58.10, 58.21, 58.70, 58.80, 58.90

The Texas Commission of Licensing and Regulation ("Commission") adopts the repeal of 16 Texas Administrative Code ("TAC") Chapter 58, §§58.1, 58.10, 58.21, 58.70, 58.80, and 58.90 regarding rental-purchase agreements to implement the restructuring of the agency's administrative rule chapters. The proposed repeal is adopted without changes to the proposal as published in the March 27, 2009, issue of the Texas Register (34 TexReg 2069) and will not be republished. The repeal takes effect July 1, 2009.

The former rules at 16 TAC Chapter 58 implemented the current statutory requirements under Texas Business and Commerce Code, Chapter 35, Subchapter F. As the result of a rule review conducted in accordance with Texas Government Code §2001.039 (see the October 19, 2007, issue of the Texas Register (32 TexReg 7511)) and House Bill 2278, passed by the 80th Legislature, which recodified the Texas Business and Commerce Code, Chapter 35, Subchapter F, to Texas Business and Commerce Code, Chapter 92, effective April 1, 2009, the Department proposed that the former rules be repealed and replaced with new 16 TAC Chapter 81. The repeal of Chapter 58 is adopted in conjunction with the adoption of new rules in Chapter 81, which are published in the Adopted Rules section of this issue of the Texas Register.

The proposed repeal was published in the Texas Register on March 27, 2009, for a 30-day public comment period. The Department received one comment letter in support of the repeal from the Texas Association of Rental Agencies, Inc. (TARA), a non-profit trade association of rent-to-own dealers.

The repeal is adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The repeal is adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department and Texas Business and Commerce Code, Chapter 35, Subchapter F.

The statutory provisions affected by the adopted repeal are those set forth in Texas Occupations Code, Chapter 51, the Commission's and Department's enabling statute and pursuant to House Bill 2278, passed by the 80th Legislature, which recodified the Texas Business and Commerce Code, Chapter 35, Subchapter F, to Texas Business and Commerce Code, Chapter 92, effective April 1, 2009. No other statutes, articles, or codes are affected by the adoption.

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 11, 2009.

TRD-200902338

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 27, 2009

For further information, please call: (512) 463-7348

The Texas Commission of Licensing and Regulation ("Commission") adopts the repeal of 16 Texas Administrative Code ("TAC") Chapter 60, §§60.1, 60.10, 60.60 - 60.66, 60.80 - 60.84, 60.100, 60.101, 60.150 - 60.160, 60.170 - 60.173, 60.200, 60.210, 60.220, 60.230, 60.240 and 60.241; and new rules §§60.1, 60.10, 60.20 - 60.24, 60.30, 60.31, 60.40, 60.50 - 60.54, 60.80 - 60.83, 60.100 - 60.102, 60.200, 60.300 - 60.311, and 60.400 - 60.409, regarding procedural rules for the Commission and the Texas Department of Licensing and Regulation ("Department"). The repeal and new rules are adopted without changes to the proposed text as published in the March 6, 2009, issue of the Texas Register (34 TexReg 1526) and will not be republished. The repeal and new rules take effect July 1, 2009.

The former rules at 16 TAC Chapter 60 implemented the statutory requirements under Texas Occupations Code, Chapter 51, the enabling statute for the Commission and the Department. As the result of a rule review conducted in accordance with Texas Government Code §2001.039 (see the October 10, 2008, issue of the Texas Register (33 TexReg 8562)), the Department proposed that the former rules be repealed and replaced with two new rule chapters, Chapters 55 and 60.

The Department has determined that these changes are necessary to ensure that the rules: (1) include and accurately reflect all of the requirements of Texas Occupations Code, Chapter 51 and other statutes affecting state agencies; (2) reflect the Commission's and the Department's current policies, procedures and practices; and (3) do not contain provisions that are more appropriately located elsewhere, such as an employee handbook. In addition, the Department has determined that the new rule structure and format will be more user-friendly since similar activities and responsibilities have been grouped together.

The repeal of the former rules at 16 TAC Chapter 60 and the adoption of the new rules in Chapter 60 are in conjunction with the adoption of the new Chapter 55, which is published in the Adopted Rules section of this issue of the Texas Register.

The former rules at 16 TAC Chapter 60 are repealed. New Chapter 60 has 10 subchapters and addresses the roles and responsibilities of the Commission and the Department and various issues involving licensees, license applicants, and other interested parties. The new rules include many of the provisions found in the former Chapter 60 rules.

Subchapter A states the statutory authority for adopting rules and provides definitions used in the chapter. Subchapter B provides details regarding the powers and responsibilities of the Commission and the Department and provides information regarding public meetings and advisory boards. Subchapter C provides details regarding the statutory authority of the Department to issue and renew licenses.

Subchapter D documents the Commission's and Department's authority under Texas Occupations Code, Chapter 53 to deny an initial or renewal license application, to suspend or revoke a current license, or to deny a person the opportunity to take an examination if the person has a criminal conviction. Subchapter E provides information regarding examinations including rescheduling, security, and results. Subchapter F sets out the fees that are applicable for all programs.

Subchapter G addresses the rulemaking authority of the Commission and the Department. Subchapter H provides information regarding the Department's complaint handling processes. Subchapter I set out the processes and procedures for contested cases. Subchapter J reflects the agency's use of mediation to resolve disputes in contested cases.

The proposed repeal and new rules were published in the Texas Register on March 6, 2009, for a 30-day public comment period. The Department did not receive any public comments on the proposed repeal and new rules.

SUBCHAPTER A. AUTHORITY AND RESPONSIBILITIES

16 TAC §60.1, §60.10

The repeal is adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The repeal is adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department.

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 11, 2009.

TRD-200902345

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§60.60 - 60.66

The repeal is adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The repeal is adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department.

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 11, 2009.

TRD-200902346

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§60.80 - 60.84

The repeal is adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The repeal is adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department.

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 11, 2009.

TRD-200902347

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§60.100, 60.101, 60.150 - 60.160, 60.170 - 60.173

The repeal is adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The repeal is adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department.

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 11, 2009.

TRD-200902348

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

DIVISION 1. VEHICLES

16 TAC §60.200

The repeal is adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The repeal is adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department.

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 11, 2009.

TRD-200902349

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §60.210

The repeal is adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The repeal is adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department.

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 11, 2009.

TRD-200902350

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §60.220

The repeal is adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The repeal is adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department.

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 11, 2009.

TRD-200902351

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §60.230

The repeal is adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The repeal is adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department.

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 11, 2009.

TRD-200902352

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §60.240, §60.241

The repeal is adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The repeal is adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department.

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 11, 2009.

TRD-200902353

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

SUBCHAPTER A. GENERAL PROVISIONS

16 TAC §60.1, §60.10

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Occupations Code, Chapters 53 and 55; Texas Government Code, Chapters 551, 552, 2001, 2008, 2009, and 2110; and Texas Civil Practice and Remedies Code, Chapter 154.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on June 11, 2009.

TRD-200902354

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§60.20 - 60.24

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Occupations Code, Chapters 53 and 55; Texas Government Code, Chapters 551, 552, 2001, 2008, 2009, and 2110; and Texas Civil Practice and Remedies Code, Chapter 154.

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 11, 2009.

TRD-200902355

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §60.30, §60.31

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Occupations Code, Chapters 53 and 55; Texas Government Code, Chapters 551, 552, 2001, 2008, 2009, and 2110; and Texas Civil Practice and Remedies Code, Chapter 154.

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 11, 2009.

TRD-200902356

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §60.40

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Occupations Code, Chapters 53 and 55; Texas Government Code, Chapters 551, 552, 2001, 2008, 2009, and 2110; and Texas Civil Practice and Remedies Code, Chapter 154.

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 11, 2009.

TRD-200902357

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§60.50 - 60.54

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Occupations Code, Chapters 53 and 55; Texas Government Code, Chapters 551, 552, 2001, 2008, 2009, and 2110; and Texas Civil Practice and Remedies Code, Chapter 154.

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 11, 2009.

TRD-200902358

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§60.80 - 60.83

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Occupations Code, Chapters 53 and 55; Texas Government Code, Chapters 551, 552, 2001, 2008, 2009, and 2110; and Texas Civil Practice and Remedies Code, Chapter 154.

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 11, 2009.

TRD-200902359

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§60.100 - 60.102

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Occupations Code, Chapters 53 and 55; Texas Government Code, Chapters 551, 552, 2001, 2008, 2009, and 2110; and Texas Civil Practice and Remedies Code, Chapter 154.

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 11, 2009.

TRD-200902360

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §60.200

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Occupations Code, Chapters 53 and 55; Texas Government Code, Chapters 551, 552, 2001, 2008, 2009, and 2110; and Texas Civil Practice and Remedies Code, Chapter 154.

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 11, 2009.

TRD-200902361

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§60.300 - 60.311

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Occupations Code, Chapters 53 and 55; Texas Government Code, Chapters 551, 552, 2001, 2008, 2009, and 2110; and Texas Civil Practice and Remedies Code, Chapter 154.

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 11, 2009.

TRD-200902362

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§60.400 - 60.409

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Occupations Code, Chapters 53 and 55; Texas Government Code, Chapters 551, 552, 2001, 2008, 2009, and 2110; and Texas Civil Practice and Remedies Code, Chapter 154.

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 11, 2009.

TRD-200902363

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 6, 2009

For further information, please call: (512) 463-7348

16 TAC §§81.1, 81.10, 81.21, 81.70, 81.80, 81.90

The Texas Commission of Licensing and Regulation ("Commission") adopts new rules at 16 Texas Administrative Code, ("TAC") Chapter 81, §§81.1, 81.10, 81.21, 81.70, 81.80, and 81.90 regarding rental-purchase agreements, without changes to the proposed text as published in the March 27, 2009, issue of the Texas Register (34 TexReg 2070) and will not be republished. The adoption takes effect July 1, 2009.

The former rules at 16 TAC Chapter 58 implemented the current statutory requirements under Texas Business and Commerce Code, Chapter 35, Subchapter F. As the result of a rule review conducted in accordance with Texas Government Code §2001.039 (see the October 19, 2007, issue of the Texas Register (32 TexReg 7511)) and House Bill 2278, passed by the 80th Legislature, which recodified the Texas Business and Commerce Code, Chapter 35, Subchapter F, to Texas Business and Commerce Code, Chapter 92, effective April 1, 2009, the Department proposed that the former rules be repealed and replaced with new 16 TAC Chapter 81. New Chapter 81 is adopted in conjunction with the repeal of former rules at 16 TAC Chapter 58, which are published in the Adopted Rules section of this issue of the Texas Register.

The Department determined that the new rules are necessary to update statutory citations, clarify statutory and administrative rule requirements, and reflect current Department procedures. There are no substantive changes to the rules.

The proposed new rules were published in the Texas Register on March 27, 2009, for a 30-day public comment period. The Department received one comment letter in support of the new rules from the Texas Association of Rental Agencies, Inc. (TARA), a non-profit trade association of rent-to-own dealers.

The new rules are adopted as the result of a rule review conducted in accordance with Texas Government Code §2001.039. The new rules are adopted under Texas Occupations Code, §51.201(b) and §51.203, which authorize the Commission, the Department's governing body, to adopt rules as necessary to implement Chapter 51 and any other law establishing a program regulated by the Department. In addition, the new rules are adopted in accordance with Texas Business and Commerce Code, Chapter 35, Subchapter F.

The statutory provisions affected by the new rules are those set forth in Texas Occupations Code, Chapter 51, the Commission's and Department's enabling statute and pursuant to House Bill 2278, passed by the 80th Legislature, which recodified the Texas Business and Commerce Code, Chapter 35, Subchapter F, to Texas Business and Commerce Code, Chapter 92, effective April 1, 2009. No other statutes, articles, or codes are affected by the adoption.

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 11, 2009.

TRD-200902339

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: July 1, 2009

Proposal publication date: March 27, 2009

For further information, please call: (512) 463-7348