|(a) Applicability. This section applies to all persons
who provide or seek to provide electric service to retail customers
in an area in which customer choice is in effect and to retail customers
participating in a customer choice pilot project authorized by the
commission. This section does not apply to the state, political subdivisions
of the state, electric cooperatives or municipal corporations, or
to electric utilities providing service in an area where customer
choice is not in effect. An electric cooperative or municipally owned
utility participating in customer choice may offer electric energy
and related services at unregulated prices directly to retail customers
who have customer choice without obtaining certification as a REP.
(1) A person must obtain a certificate pursuant to
this subsection before purchasing, taking title to, or reselling electricity
in order to provide retail electric service.
(2) A person who does not purchase, take title to,
or resell electricity in order to provide electric service to a retail
customer is not a REP and may perform a service for a REP without
obtaining a certificate pursuant to this section.
(3) A REP that outsources retail electric functions
remains responsible under commission rules for those functions and
remains accountable to applicable laws and commission rules for all
activities conducted on its behalf by any subcontractor, agent, or
any other entity.
(4) All filings made with the commission pursuant to
this section, including a filing subject to a claim of confidentiality,
shall be filed with the commission's filing clerk in accordance with
the commission's Procedural Rules, Chapter 22, Subchapter E, of this
title (relating to Pleadings and other Documents).
(b) Definitions. The following words and terms when
used in this section shall have the following meaning unless the context
(1) Affiliate--An affiliate of, or a person affiliated
with, a specified person, is a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by,
or is under the common control with, the person specified.
(2) Continuous and reliable electric service--Retail
electric service provided by a REP that is consistent with the customer's
terms and conditions of service and uninterrupted by unlawful or unjustified
action or inaction of the REP.
(3) Control--The term control (including the terms
controlling, controlled by and under common control with) means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through
ownership of voting securities, by contract, or otherwise.
(4) Customer--Any entity who has applied for, has been
accepted for, or is receiving retail electric service from a REP on
an end-use basis.
(5) Default--As defined in a transmission and distribution
utility (TDU) tariff for retail delivery service, Electric Reliability
Council of Texas (ERCOT) qualified scheduling entity (QSE) agreement,
or ERCOT load serving entity (LSE) agreement.
(6) Executive officer--When used with reference to
a person means its president or chief executive officer, a vice president
serving as its chief financial officer, or a vice president serving
as its chief accounting officer, a vice president in charge of a principal
business unit, division or function, any other officer of the person
who performs a policy making function for the person, or any other
person who performs similar policy making functions for the person.
Executive officers or subsidiaries may be deemed executive officers
of the person if they perform policy making functions for the person.
(7) Guarantor--A person providing a guaranty agreement,
business financial commitment, or a credit support agreement providing
financial support to a REP or applicant for REP certification pursuant
to this section.
(8) Investment-grade credit rating--A long-term unsecured
credit rating of at least "Baa3" from Moody's Investors' Service,
or "BBB-" from Standard & Poor's or Fitch, or "BBB" from A.M.
(9) Permanent employee--An individual that is fully
integrated into a REP's business organization. A consultant is not
a permanent employee.
(10) Person--Includes an individual and any business
entity, including and without limitation, a limited liability company,
a partnership of two or more persons having a joint or common interest,
a mutual or cooperative association, and a corporation, but does not
include an electric cooperative or a municipal corporation.
(11) Principal--An executive officer; partner; owner;
director; shareholder of a privately held company; shareholder of
a publicly traded company who owns more than 10 % of a class of equity
securities; or a person that controls the person in question.
(12) Retail electric provider--A person that sells
electric energy to retail customers in this state. As provided in
Public Utility Regulatory Act (PURA) §39.353(b), a REP is not
(13) Shareholder--The term shareholder means the legal
or beneficial owner of any of the equity of any business entity, including
without limitation and as the context and applicable business entity
requires, stockholders of corporations, members of limited liability
companies and partners of partnerships.
(14) Tangible net worth--Total shareholders' equity,
determined in accordance with generally accepted accounting principles,
less intangible assets other than goodwill.
(15) Working day--A day on which the commission is
open for the conduct of business.
(c) Application for REP certification.
(1) A person applying for certification as a REP must
demonstrate its capability of complying with this section. A person
who operates as a REP or who receives a certificate under this section
shall maintain compliance with this section.
(2) An application for certification shall be made
on a form approved by the commission, verified by oath or affirmation,
and signed by an executive officer of the applicant.
(3) Except where good cause exists to extend the time
for review, the presiding officer shall issue an order finding whether
an application is deficient or complete within 20 working days of
filing. Deficient applications, including those without necessary
supporting documentation, will be rejected without prejudice to the
applicant's right to reapply.
(4) While an application for a certificate is pending,
an applicant shall inform the commission of any material change in
the information provided in the application within ten working days
of any such change.
(5) Except where good cause exists to extend the time
for review, the commission shall enter an order approving, rejecting,
or approving with modifications, an application within 90 days of
the filing of the application.
(d) REP certification requirements. A person seeking
certification under this section may apply to provide services under
paragraph (1) or (2) of this subsection, and shall designate its election
in the application.
(1) Option 1. This option is for a REP whose service
offerings will be defined by geographic service area.
(A) An applicant must designate one of the following
categories as its geographic service area:
(i) The geographic area of the entire state of Texas;
(ii) A specific geographic area (indicating the zip
codes applicable to that area);
(iii) The service area of specific TDUs or specific
municipal utilities or electric cooperatives in which competition
is offered; or
(iv) The geographic area of ERCOT or other independent
organization to the extent it is within Texas.
(B) A REP with a geographic service area is subject
to all subsections of this section, including those pertaining to
basic, financial, technical and managerial, customer protection, and
reporting and changing certification requirements.
(C) The commission shall grant a certificate to an
applicant proposing to provide retail electric service to a geographic
service area in Texas if it demonstrates that it meets the requirements
of this section.
(D) The commission shall deny an application if the
configuration of the proposed geographic area would discriminate in
the provision of electric service to any customer because of race,
creed, color, national origin, ancestry, sex, marital status, lawful
source of income, disability, or familial status; because the customer
is located in an economically distressed geographic area or qualifies
for low income affordability or energy efficiency services; or because
of any other reason prohibited by law.
(2) Option 2. This option is for a REP whose service
offerings will be limited to specifically identified customers, each
of whom contracts for one megawatt or more of capacity. The applicant
shall be certified as a REP only for purposes of serving the specified
customers. The commission shall grant a certificate under this paragraph
if the applicant demonstrates that it meets the requirements of this
(A) A person seeking certification under this paragraph
must file with the commission a signed, notarized affidavit from each
customer, with whom it has contracted to provide one megawatt or more
of capacity. The affidavit must state that the customer is satisfied
that the REP meets the standards prescribed by PURA §39.352 (b)(1)-(3)
(B) The following subsections apply to REPs certified
pursuant to this paragraph:
(i) Subsection (e) of this section (relating to Basic
(ii) Subsection (f)(5) of this section (relating to
Billing and Collection of Transition Charges); and
(iii) Subsection (i) of this section (relating to Requirements
for Reporting and Changing Certification).
(3) Option 3. This option 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. The following subsections do
not apply to REPs certified pursuant to this paragraph: subsections
(f), (g), (h), and (i)(4)-(5) of this section, except that a person
seeking certification under this paragraph shall file an application
with the commission that identifies a power generation company that
owns the distributed generation facilities and provides the information
required in subsection (g)(2)(A) of this section. A person seeking
certification under this paragraph shall ensure that the distributed
generation facility from which it buys electricity is owned by a power
generating company (PGC) that has registered in accordance with §25.109
of this title (relating to Registration of Power Generation Companies
and Self Generators), and
(A) Conforms to the requirements of §25.211 of
this title (relating to Interconnection of On-Site Distributed Generation
(DG)) and §25.212 of this title (relating to Technical Requirements
for Interconnection and Parallel Operation of On-Site Distributed
(B) Is installed by a Licensed Electrician, consistent
with the requirements of the Texas Department of Licensing and Regulation;
(C) Is installed in accordance with the National Electric
Code as adopted by the Texas Department of Licensing and Regulation
and in compliance with all applicable local and regional building
(e) Basic requirements.
(1) Names on certificates. All retail electric service
shall be provided under names set forth in the granted certificate.
If the applicant is a corporation, the commission shall issue the
certificate in the corporate name of the applicant.
(A) No more than five assumed names may be authorized
for use by any one REP at one time.
(B) Business names shall not be deceptive, misleading,
vague, otherwise contrary to §25.272 of this title (relating
to Code of Conduct for Electric Utilities and Their Affiliates), or
duplicative of a name previously approved for use by a REP certificate
(C) If the commission determines that any requested
name does not meet the requirements of subparagraph (B) of this paragraph,
it shall notify the applicant that the requested name shall not be
used by the REP. An application shall be dismissed if an applicant
does not provide at least one suitable name.
(2) Office requirements. A REP shall continuously maintain
an office located within Texas for the purpose of providing customer
service, accepting service of process and making available in that
office books and records sufficient to establish the REP's compliance
with PURA and the commission's rules. The office satisfying this requirement
for a REP shall have a physical address that is not a post office
box and shall be a location where the above three functions can occur.
To evaluate compliance with requirements in this paragraph, the commission
staff may visit the office of a REP at any time during normal business
hours. An applicant shall demonstrate that it has made arrangements
for an office located in Texas.
(f) Financial requirements.
(1) Access to capital. A REP must meet the requirements
of subparagraphs (A) or (B) of this paragraph.
(A) A REP or its guarantor electing to meet the requirements
of this subparagraph must demonstrate and maintain:
(i) an investment-grade credit rating; or