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PUCT Staff Draft Proposal for Adoption Would Maintain Current Limit of Five Trade Names for REPs

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October 8, 2010

PUCT Staff have filed a draft proposal for adoption concerning amendments to the REP certification rules under Subst. R. 25.107 which eliminates the earlier proposal to limit a REP to a single assumed name on its certificate (37685, Only in Matters, 6/15/10).

Staff's proposal for adoption would retain the current ability for REPs to use up to five assumed names.  Staff's proposed preamble states that, "[t]he commission is persuaded ... that companies have invested money in particular brands they have created and that REPs should be able to retain the brands they have to market to different segments of customers."

Staff's preamble also cites comments from ERCOT regarding the additional costs that might be associated with the proposed limit of one trade name (if it also applied to the ERCOT LSE registration process, see Matters, 8/9/10).  Staff concluded that the current limit of five trade names strikes an appropriate balance in preventing customer confusion while recognizing the issues cited above.

Staff's filed proposal for adoption does not make, at this time, any substantive changes to the draft requirement that REPs must seek pre-approval for changes in control, nor in the draft provisions defining and governing such a process.  However, Staff requested further guidance from the Commission on this issue.  Staff noted that stakeholders have raised the following questions, to which Staff has not yet drafted responses:

• Should the commission require pre-approval of a change in control of a REP?
• If so, should an expedited review process be established for such pre-approval?  Should this process differ if the REP is acquired by another certificated REP?
• What should constitute a change in control of a REP?

Staff asked the Commission to provide guidance on the change in control issue at the October 14 open meeting, and said that it would then present a revised proposal for adoption for Commission action at the October 22 meeting.

Staff's proposal for adoption modifies the earlier draft provision that applicants seeking a REP certificate or certificate amendment must identify all persons that directly or indirectly own at least 5% of the voting securities or other ownership interests of the applicant and their respective ownership percentages.  

Under Staff's proposal for adoption, applicants will only be required to identify persons that directly or indirectly own more than 10% of the voting securities or other ownership interests of the applicant and their respective ownership percentages.

Furthermore, Staff has modified the proposed amendments such that applicants would not be required to disclose all criminal, civil, and regulatory charges or allegations against the applicant or its principals or affiliates.  Instead, applicants must only disclose pending charges or allegations of various criminal activity or civil non-compliance, plus cases in which the charges resulted in a conviction, plea of guilty or nolo contendere, or similar civil or administrative finding or judgment of a violation of a law or rule.  Essentially, the modifications eliminate the need to disclose charges that were dismissed or adjudicated without any adverse finding or plea.

Staff's proposal for adoption maintains the provision that applicants for a REP certificate may be required to fund an independent background check.

Additionally, the draft proposal for adoption retains a provision which holds that erroneously placing a switch hold on a customer, or failing to remove a switch hold under the deadlines established by rule, amounts to a significant violation for purposes of potential certificate suspension or revocation.  Staff found that it would be inappropriate to modify this proposal to find that only switch-holds that were intentionally and willfully misapplied should be considered a significant violation.  

"Adding a requirement of intentional and willful misapplication would not incent companies to build systems and processes to ensure that switch-holds are applied only to customers that are subject to the switch-hold and are removed within the prescribed timeline," Staff said.

Staff's proposal for adoption retains the proposed new category of an Option 3 REP, which is for a REP that sells electricity exclusively to a retail customer other than a small commercial and residential customer from a distributed generation facility located on a site controlled by that customer.

   
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