A Precedent-setting Switch-old Settlement

Read the press about NRG’s settlement with PUCT staff related to alleged switch-hold violations.  Clearly, the issue surrounds when exactly a switch-hold must be removed.  As the settlement states, the rules require the following with respect to removal:

  • § 25.480(m) requires that the retail electric provider (REP) request removal of the switch-hold by the transmission and distribution utility (TDU) “after the customer’s obligation to the REP relating to the switch-hold is satisfied.”
  • § 25.480(j)(8) provides that a REP “shall submit a request to remove the switch-hold, pursuant to subsection (m) of this section, after the customers payment of the deferred balance owed to the REP.”
  • § 25.480(j)(5)(B) requires the REP to inform the customer that “The switch-hold will be removed after your final payment on this past due amount is processed.”
  • §25.480(h)(7) requires a REP to inform the customer that a switch-hold “…will be removed after your deferred balance is paid and processed.”

The NRG family of companies clearly had a policy in place whereby a set number of days elapsed on all payments to ensure the payments were not returned as insufficient funds prior to fully considering those payments as “satisfactory” for purposes of switch-hold removal.  Staff clearly took issue with the blanket approach of this policy as it would appear to apply to cash payments (where NSF issues would be moot).

It will be interesting to see how the Commissioners deal with this when it comes up for Open Meeting discussion.

I can clearly recall the stakeholder meeting with PUCT staff when the exact language of §25.480(m) was discussed and agree with NRG that it was left vague so as to allow REPs some flexibility in the timelines for processing payments.  Unfortunately, none of that conversation was captured in the official rulemaking record.

In the meantime, I would advise all REPs to let this be a lesson to you going forward.  If you want to ensure the intent behind rule language, you must make formal comments during the rulemaking process as to what you believe proposed language is intended to do.  That would require staff to summarize those comments in the preamble to the adopted rule.  That’s what gives clarity to the intent of rule language.  Absent that, staff is only guided by the plain reading of the rule.


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