By:  Armbrister                                                   S.B. No. 1506

A BILL TO BE ENTITLED
AN ACT
relating to default service for residential customers of an Affiliated Retail Electric Provider BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Chapter 39, Subchapter E, Utilities Code, is amended to read as follows: Section 39.2025 DEFAULT SERVICE. (a) Commencing January 1, 2007, Affiliated Retail Electric Providers (AREPs) shall provide Default Service electric service to residential customers who have not elected to take electric service from a Competitive Retail Electric Provider, or whose Competitive Retail Electric Provider supply agreement has expired or otherwise terminated. Default Service shall be a non-discriminatory basic service whereby wholesale supply is procured competitively by the applicable AREP. The PUCT, in coordination with ERCOT, shall contract with one or more private entities, certified by ERCOT as qualified to establish and conduct a competitive procurement process, to provide the functions provided for in this section. (b) The commission, in coordination with ERCOT, shall adopt rules and standards to implement the Default Service provided for in Subsection (a). (c) In adopting rules and standards required by Subsection (b), among other elements, the Commission shall address the following: 1) The competitive procurement process shall be an open and transparent solicitation for the wholesale, full requirements supply to residential customers; 2) In order to ensure continued development of competitive retail markets, Default Service rates shall reflect the results of the wholesale competitive procurement process plus the full cost incurred by the AREP to provide Default Service to residential customers, such that Default Service is not subsidized by any other services that the AREP may provide; 3) Default Service shall include financial performance standards including minimum credit requirements for potential wholesale suppliers; 4) Duration of wholesale power supply contracts awarded under this solicitation shall ensure Default Services is generally reflective of existing market pricing; 5) A limit on the amount served by any single wholesale supplier of default service within each AREP service territory; 6) A limit on the amount served by any single wholesale supplier in the total ERCOT Default Service market; 7) Detailed energy product description; and 8) Safeguards to ensure switching restrictions eliminate the potential for economic arbitrage between Default Service and Competitive Retail Electric Providers. (d) The commission shall be responsible for determining the rate mechanism to ensure the price adequately reflects all retail costs and does not impede competitive retail market developments. SECTION 7. This Act takes September 1, 2005.