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POLRized in Texas: A Duty Unresolved

The Texas method for assigning provider of last resort draws criticism from market players and consumer advocates.
Fortnightly Magazine - July 15 2002

by REP default. There have been, however, over 11,000 potential customers (completed, scheduled, or in review) dropped to POLR assignments for non-payment 1 Currently only the POLR can ask for a customer to be disconnected. Thus before a customer is disconnected they must be "dropped to POLR," and then must also miss payments with the POLR.

In early 2001 the PUCT solicited bids for POLR obligation. The process did not end satisfactorily. Terri Eaton of the PUCT described in part what impelled a new rulemaking to improve the POLR process. "The selection process for the POLR was very difficult. Only one qualified bidder, TXU, submitted qualifying bids for POLR service, and by rule could not be the POLR in its own service territory. We [the PUCT] had to assign POLR obligations to various REPs through a contentious, contested, case-hearing process. There was a great amount of criticism that the original POLR prices bid were very high. There was pressure to keep rates low. Ultimately, TXU lowered its rates for service awarded under its initial bid."

The high prices, fees, and deposits for POLR customers incensed consumer advocates. "We feel like it is designated for the poor people only because the rich people don't need it," said Bobbie Rice, a Dallas resident representing the Association of Community Organizations for Reform Now (ACORN). "It's a dumping ground for working poor and very poor families." 2 The high prices were justified by REPs as commensurate with the risk associated with serving POLR customers at a fixed, non-discountable rate, and serving non-paying customers 3

Who should be the POLR and who should have the right of disconnection? Many of the consumer advocates argued that the POLR structure should be close to structure of other states; when a customer of a competitive REP is dropped for non-payment they should (at least for the interim) have the right to return to the AREP at the PTB rate. Alexander said, "POLR should not be a bifurcated service, with the low-income customers relegated to a higher price service with additional charges. Texas should be like every other state. ... The current bifurcated service is not appropriate, [is] discriminatory, and would not be supported by any consumer advocate."

Fixing the Problem: A Universe of Proposals

Alexander says she would support a POLR construct in which customers that are dropped by their REPs for non-payment are sent back to their AREP. The AREPs would then have both the responsibility of being a POLR and the right to disconnect, she points out. "Competitive providers should not have control over life and death issues, as electricity supply is for many," Alexander contends. Further, she argues, the PUCT could not control and regulate the process if all REPs were given the right to disconnect. "The potential for abuse or mistakes from REPs is too high for significant health and safety issues associated with disconnection. Also, [in] what other market can one competitor stop me from shopping with another competitor? Can KMart stop me from shopping at Sears if I am late in payment to KMart?