81R11066 TRH-F

By: Davis, Wendy S.B. No. 2129

A BILL TO BE ENTITLED

AN ACT

relating to the certification of retail electric providers.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 39.352, Utilities Code, is amended by amending Subsection (a) and adding Subsections (a-1), (a-2), (a-3), (a-4), (a-5), (a-6), (b-1), (b-2), and (h) to read as follows:

(a) After the date of customer choice, a person, including an affiliate of an electric utility, may not provide retail electric service in this state, or purchase, take title to, or resell electricity in this state for sale to a retail customer unless the person is certified by the commission as a retail electric provider, in accordance with this section.

(a-1) In order to be certified as a retail electric provider, a person must submit an application to the commission on a form prescribed by the commission. An application submitted under this section must be signed by the applicant's principal and verified by oath or affirmation. Not later than the 20th day after the date an application is submitted, the commission shall issue an order determining the application to be complete or deficient. An order finding an application to be deficient constitutes a rejection of the application. The commission shall reject an application if the application does not contain at least one suitable name under which a certificate may be issued. A rejection of an application does not prevent an applicant from submitting a new application.

(a-2) Not later than the 10th day after the date an applicant identifies a material change in information provided in a pending application, the applicant shall inform the commission of the change.

(a-3) The commission shall reject an application for certification as a retail electric provider to serve customers in a specified geographic area under Subsection (a-6) if the commission finds that the provision of service only in the proposed geographic area would result in discrimination in the provision of electric service to any customer because of:

(1) race;

(2) creed;

(3) color;

(4) national origin;

(5) ancestry;

(6) sex;

(7) marital status;

(8) lawful source of income;

(9) disability;

(10) familial status;

(11) the fact that:

(A) the customer is located in an economically distressed area; or

(B) the customer qualifies for low income affordability or energy efficiency services; or

(12) any other basis prohibited by law.

(a-4) Unless the commission finds sufficient cause to extend the period of review of an application, not later than the 90th day after the date an application is submitted, the commission shall:

(1) approve the application as submitted;

(2) reject the application; or

(3) approve the application with modifications.

(a-5) An applicant shall designate on the application whether the applicant seeks to offer service:

(1) to customers in a specified geographic service area; or

(2) to certain specified customers.

(a-6) If an applicant seeks to offer service to customers in a specified geographic service area under Subsection (a-5), the applicant must indicate on the application that the geographic area to be served includes:

(1) the entire state;

(2) a specific geographic area of this state covering certain specified zip codes;

(3) the service area of certain specified transmission and distribution utilities, municipal utilities, or electric cooperatives in which competition is offered; or

(4) the portion of an independent organization certified under Section 39.151 that is located in this state.

(b-1) An application for certification as a retail electric provider must demonstrate that a retail electric provider, its guarantor, or a combination of the retail electric provider and its guarantor:

(1) has an investment-grade credit rating; or

(2) maintains:

(A) a tangible net worth of at least $100 million;

(B) a current ratio of at least 1.0; and

(C) a debt to total capitalization ratio of not more than 0.6.

(b-2) As an alternative to the requirements of Subsection (b-1), an application for certification as a retail electric provider may demonstrate that a retail electric provider, its guarantor, or a combination of the retail electric provider and its guarantor has:

(1) liquid capital of not less than $3 million;

(2) liquid capital of not less than $2 million, if the retail electric provider has continuously served retail customers in this state's retail electricity market without sanction or default for not less than two years; or

(3) liquid capital of not less than $1 million, if the retail electric provider has continuously served retail customers in this state's retail electricity market without sanction or default for not less than three years.

(h) The commission shall issue a certificate in the applicant's corporate name if the applicant is a corporation. The commission may approve not more than five other names for a certificated retail electric provider to use in providing service under a certificate.

SECTION 2. Subchapter H, Chapter 39, Utilities Code, is amended by adding Section 39.3521 to read as follows:

Sec. 39.3521. CONDITIONS ON CERTIFICATES; DUTIES OF RETAIL ELECTRIC PROVIDERS. (a) The commission shall condition issuance of a certificate under Section 39.352 on the retail electric provider providing service only under the names under which the certificate is issued.

(b) On the issuance of a certificate under Section 39.352, a retail electric provider shall continuously maintain an office in this state for the purpose of providing customer service, accepting service of process, and making available in that office books and records sufficient to establish the retail electric provider's compliance with this title. An office maintained under this subsection must:

(1) have a physical address that is not a post office box; and

(2) be in a location where the purposes of this subsection may be achieved.

(c) A retail electric provider that demonstrates financial security under Section 39.352(b-1) shall keep customer deposits in a restricted cash account or escrow account, or provide an irrevocable standby letter of credit in an amount sufficient to cover the entire amount of the retail electric provider's outstanding customer deposits and advances at all times.

(d) A retail electric provider that demonstrates financial security under Section 39.352(b-2) shall keep all customer deposits in an escrow account, or provide an irrevocable standby letter of credit in an amount sufficient to cover the entire amount of the retail electric provider's outstanding customer deposits and advances at all times.

(e) To maintain a retail electric provider certificate, the holder of the certificate must keep its certification information current. Not later than the 15th day after the date of a change in a certificate holder's business address, telephone number, authorized contacts, or other contact information, the certificate holder shall notify the commission of the change. On a material change to information provided to the commission as a basis for the commission's approval of a certificate, the holder of the certificate shall notify the commission of the change not later than the 10th day after the date the change occurs. A retail electric provider may seek prior approval from the commission regarding a change, by submitting to the commission an amendment application before the material change occurs. For purposes of this section, the transfer of a retail electric provider certificate is a material change.

(f) Not later than the 45th day before the date a retail electric provider ceases to operate, the retail electric provider shall give notice to:

(1) the commission;

(2) each customer to whom the retail electric provider is scheduled to be providing service on the planned date of cessation of operations; and

(3) any other person affected by the cessation of operations, including:

(A) an applicable independent organization certified under Section 39.151;

(B) a transmission and distribution utility;

(C) an electric cooperative;

(D) a municipally owned utility;

(E) a generation supplier; and

(F) a provider of last resort.

(g) On the cessation of operation by a retail electric provider, the provider shall submit to the commission proof that any money owed to the provider's customers has been refunded. The retail electric provider's certificate is suspended on the effective cessation date. The commission may not reinstate a certificate unless the certificate holder demonstrates that the certificate holder is in compliance with the certification requirements of this title. The commission may revoke a suspended certificate if it determines that the certificate holder does not meet the certification requirements of this title.

(h) A retail electric provider shall notify the commission and provide the commission with a summary of an insolvency proceeding not later than the third day after the date the retail electric provider files a petition in bankruptcy, becomes the subject of an involuntary bankruptcy proceeding, or in any other manner becomes insolvent. To satisfy any unpaid obligation of the retail electric provider to customers, or unpaid administrative penalties, the commission may proceed against any financial resources that the retail electric provider relied on in obtaining its certificate.

(i) A retail electric provider shall respond not later than the third day after the date it receives a request from the commission for additional information to ensure compliance with this section.

SECTION 3. Section 39.356(a), Utilities Code, is amended to read as follows:

(a) The commission may suspend, revoke, or amend a retail electric provider's certificate for significant violations of this title or the rules adopted under this title or of any reliability standard adopted by an independent organization certified by the commission to ensure the reliability of a power region's electrical network, including the failure to observe any scheduling, operating, planning, reliability, or settlement protocols established by the independent organization. The commission may also suspend or revoke a retail electric provider's certificate if the provider no longer has the financial or technical capability to provide continuous and reliable electric service. For purposes of this subsection, "significant violations" include:

(1) providing false or misleading information to the commission;

(2) engaging in fraudulent, unfair, misleading, deceptive, or anticompetitive practices, or unlawful discrimination;

(3) switching, or causing to be switched, the retail electric provider for a customer without first obtaining the customer's permission;

(4) billing an unauthorized charge, or causing an unauthorized charge to be billed, to a customer's retail electric service bill;

(5) failure to maintain continuous and reliable electric service to customers pursuant to this chapter;

(6) failure to maintain the financial resources the provider was required to have to obtain a certificate under Section 39.352;

(7) bankruptcy, insolvency, or the inability to meet financial obligations on a reasonable and timely basis;

(8) failure to timely remit payment for invoiced charges to an independent organization certified under Section 39.151;

(9) failure to observe applicable scheduling, operating, planning, reliability, and settlement polices, protocols, guidelines, procedures, and other rules established by an independent organization certified under Section 39.151;

(10) demonstrating a pattern of not responding to commission inquiries or customer complaints in a timely manner;

(11) suspension or revocation of a registration, certification, or license by any state or federal authority;

(12) conviction of a felony by the certificate holder or principal employed by the certificate holder, or a conviction for any crime involving fraud, theft, or deceit related to the certificate holder's service;

(13) failure to provide retail electric service to customers more than 24 months after a certificate is granted by the commission;

(14) failure to serve as a provider of last resort if required by the commission;

(15) providing retail electric service in an area in which customer choice is in effect without obtaining a certificate under this chapter; and

(16) a failure or a pattern of failures to meet the requirements of this title.

SECTION 4. (a) The changes in law made by this Act apply to a retail electric provider regardless of whether the provider is certified before, on, or after the effective date of this Act.

(b) A retail electric provider certified before the effective date of this Act shall notify the Public Utility Commission of Texas if the provider is unable to comply with the financial requirements of Section 39.352, Utilities Code, as amended by this Act, not later than March 1, 2010, and shall surrender its certificate as a retail electric provider not later than September 1, 2010, if the provider cannot comply with those requirements.

SECTION 5. The Public Utility Commission of Texas shall adopt rules consistent with Sections 39.352 and 39.356, Utilities Code, as amended by this Act, and Section 39.3521, Utilities Code, as added by this Act, not later than December 1, 2009.

SECTION 6. This Act takes effect September 1, 2009.