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PUCT to Further Consider dPi Energy Certificate Settlement
June 20, 2011
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The PUCT held until its next meeting action on a settlement between dPi Energy and Staff that would require dPi Energy to be sold in order to retain its REP certificate.
The stipulation, which was first reported by Matters (5/10), would resolve Staff's petition to revoke dPi Energy's REP certificate for, among other reasons, lack of managerial and technical competency due to its 50% ownership by Zahed "Ed" Lateef, who was a principal of Riverway Power when it experienced an involuntary mass transition.
The stipulation would require Amvensys Telecom Holdings, LLC, which ultimately owns dPi Energy and is owned by Lateef and his wife (50% each), to divest all of its ownership and control of dPi Energy, by a redacted date, in a process managed by Southwest Securities. The settlement provides that if the Commission does not approve the new owner, or if dPi Energy and the acquiring party fail to close the acquisition transaction within ten days of the Commission's approval of the application, dPi's REP certificate would be revoked pursuant to a consent order agreed to among the settling parties.
Commissioners expressed a number of concerns with the settlement, stating that it did not provide them with enough assurance that under the new ownership dPi Energy would not repeat its prior behavior, which had resulted in a separate stipulation to settle a Staff Notice of Violation (see 11/5).
In particular, Commissioner Kenneth Anderson requested that the settlement provide that dPi Energy be prohibited from relying on Amvensys or Lateef for any backoffice or similar service. Testimony in the case suggested that, even after the sale, dPi would continue to rely on Amvensys for various backoffice functions.
At the open meeting, dPi clarified that it was contemplated by the settling parties that dPi would not use Amvensys as originally planned; however, that condition was not memorialized in the settlement. Without such a provision embodied in the settlement, Commissioners were concerned with ensuring that Lateef has no future involvement with the REP.
A threshold question which remains before the Commission is whether the Commission believes it is sufficient for Lateef to be removed as an owner and principal of dPi Energy, or whether the Commission feels the certificate needs to be revoked regardless of Lateef's removal. Commissioner Donna Nelson, in particular, cited a litany of findings of violations she is inclined to make against the REP, not all of which relate to actions by Lateef. Nelson noted that another dPi officer swore in an affidavit to the accuracy of dPi's petition to amend its certificate, which, among other things, failed to disclose Lateef's role at Riverway.
Staff said that if the Commission's concern is to remove Lateef from the market, the settlement is the quickest and most direct avenue to accomplish that goal. However, the settlement would not revoke dPi's REP certificate, and proceeding with a hearing on the merits of Staff's revocation petition in the absence of the settlement would take considerably more time.
Chairman Barry Smitherman stressed that the Commission's goal is to keep bad actors out of the market, and to ensure that bad behavior is not repeated, the latter of which is giving the Commission pause in consideration of allowing dPi Energy to continue operating.
Commissioners are also considering dPi Energy's current customer base of approximately 25,000 as Commissioners weigh whether to revoke the certificate or not.
dPi reported that it will continue with the sale process contemplated by the settlement as the Commission further considers the stipulation.
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