Provider of Last Resort: Electricity Safety Net for Texas Residents
Electricity powers almost all our daily activities. It has become such an integral part of our lives that we experience utmost discomfort and inconvenience when outages occur. Now, electricity gets to our homes due to various sectors’ combined efforts in power production and distribution. This includes your Retail Electric Provider (REP), which supplies your home with the electric power you need.
Unfortunately, nothing lasts forever, and this holds true even for your power provider. Instances abound when Retail Electricity Providers go out of business. What happens then? Will you experience an interruption in service while you scout around for another provider?
If you live in Texas, that’s not likely to happen. That’s because of a safety net designed to ensure that your electric service continues even as your current REP exits the market. This safety net is called the provider of last resort (POLR).
Let’s talk in detail about what a provider of last resort does and how it helps you transition to a new Retail Electricity Provider without losing electric service.
What is a Provider of Last Resort (POLR)?
A provider of last resort (POLR) serves as your fallback when your retail electricity provider goes out of business or exits the market. If your current REP ceases operation for any reason, the POLR becomes your power provider. In this way, you get uninterrupted electric service.
The situation is temporary and is in effect only until you shift to a new REP. This ensures that your home remains powered even if your utility provider can no longer supply you with electric power. That’s the good news. The bad news is, you will pay more for your electricity.
How Does the Provider of Last Resort Function?
The Public Utility Commission of Texas (PUCT) determines the provider of last resort that will provide POLR service depending on your electric utility service area. The commission changes the Provider of Last Resort every two years.
The largest providers in a utility service area usually get designated as the POLRs. Still, smaller providers can take part if they meet the eligibility criteria. These criteria cover the financial and technical capacity to accommodate new customers quickly.
If your electric provider closes shop, you get transferred to a POLR that will take care of your energy needs. As such, a Provider of Last Resort acts as your temporary REP until you pick a new one.
Alternatively, a Provider of Last Resort takes over if a customer requests POLR service.
The Importance of POLR in Texas
Before energy deregulation took place in Texas, utilities had a monopoly on the power market. They took charge of everything related to the selling and distribution of electric power. As such, consumers don’t have a choice but to accept their rates and terms.
During that time, the Transmission and Distribution Utilities (TDUs) or Transmission and Distribution Service Providers (TDSPs) maintained the infrastructure associated with power distribution, such as utility poles and wires. They also took care of electrical emergencies like power outages. These companies include AEP Texas Central, Texas-New Mexico Power, CenterPoint Energy, and Oncor Electric Delivery.
When the energy market became deregulated, new players got into the market. This gave consumers more options in choosing their electric supplier. Under a deregulated market, the utilities only distribute electric power. Meanwhile, selling electricity to consumers is the job of the various REPs, who offer competitive electricity rates to attract consumers.
To further prevent the power utilities from selling electricity, policymakers instituted the POLR system. Under this system, another electric provider may continue service if an existing retail electricity provider were to go out of the market for any reason.
Who is your POLR?
Two factors will determine your POLR. These are your service area and the type of energy you receive (whether residential or commercial).
Under the POLR system, customers fall into 4 different classifications.
- Small non-residential
- Medium non-residential
- Large non-residential
Depending on where you live in Texas and your classification, the following POLRs associated with the distribution utilities will become your service provider if your current REP stops operating.
TXU Energy services all the customers under the different classification groups. This ranges from residential to large non-residential users.
Reliant Energy is the POLR for residential up to medium non-residential customers. Meanwhile, Calpine Energy Solutions is the POLR for large non-residential power users.
TXU Energy is the provider of last resort for residential and medium non-residential customers. Reliant Energy will cover small and large non-residential consumers.
AEP Texas North
TXU Energy is the POLR for residential and medium non-residential groups. Meanwhile, small and large non-residential electricity consumers will go to Reliant Energy.
AEP Texas Central
The residential and medium non-residential power consumers will get TXU Energy as their POLR. The small and large non-residential groups will have Reliant Energy as their service provider.
POLR Service Area Designation
|Area||Residential||Small Non-Residential||Medium Non-Residential||Large Non-Residential|
|Oncor||TXU Energy Retail Company, LLC||TXU Energy Retail Company, LLC||TXU Energy Retail Company, LLC||TXU Energy Retail Company, LLC|
|CenterPoint||Reliant Energy Retail Services, LLC||Reliant Energy Retail Services, LLC||Reliant Energy Retail Services, LLC||Calpine Energy Solutions, LLC|
|AEP Texas Central||TXU Energy Retail Company, LLC||Reliant Energy Retail Services, LLC||TXU Energy Retail Company, LLC||Reliant Energy Retail Services, LLC|
|AEP Texas North||TXU Energy Retail Company, LLC||Reliant Energy Retail Services, LLC||TXU Energy Retail Company, LLC||Reliant Energy Retail Services, LLC|
|TNMP||TXU Energy Retail Company, LLC||Reliant Energy Retail Services, LLC||TXU Energy Retail Company, LLC||Reliant Energy Retail Services, LLC|
Source: Public Utility Commission of Texas
Steps to Take When Your Service Shifts to a POLR
If your REP goes out of business and the POLR becomes your electricity provider, the following happens:
#1 You will receive communication from 3 entities.
- Public Utilities Commission of Texas (PUCT): The PUCT will inform you that your Retail Electric Provider is going out of business and your transition to a POLR. That’s why it’s essential to give the correct contact information.
- Your current REP: You’ll get a notice telling you about the change of service.
- Your POLR: The provider of last resort lets you know about the new POLR electricity plan associated with their service.
#2 The POLR may require you to put down a deposit. This happens if you haven’t selected a new electricity plan or switched to a new electric provider after 15 days.
#3 If you decide to stick with the POLR service, you have 60 days to pick another electricity plan with your Provider of Last Resort or choose another power service provider. During this time, you have the option to switch to a different REP without paying a fee.
Do POLRs Have Expensive Electricity Plans?
POLR electricity rates are so much higher than standard market rates. This gives the Provider of Last Resort a financial incentive to accept a sudden surge of new customers. POLRs also have to make provisions for uncertain electricity loads caused by the customer influx whenever a REP closes shop. As such, they need to charge more.
Am I Stuck with my POLR?
Definitely not. You’re not under contract with a POLR, so that means you can shift to a new REP as soon as you find one that fits your needs. In fact, we encourage you to shop around for a new provider as soon as possible.
What happens to my contract and account with my previous provider?
When your REP ceases operation and a Provider of Last Resort takes over, that ends your contract with your former provider. Included in the dissolution are AutoPay links, rewards, historical bills, and other account services.
You have 60 days to switch to a new service provider, and after that time, the POLR will likely put you into a month-to-month variable rate electricity plan. In this type of energy plan, the power rates vary. They go up or down depending on how much it costs to generate electricity.
Will I be charged an Early Termination Fee for my contract with my previous REP?
When you shift to a POLR, your contract with your previous REP gets dissolved. Because the contract is no longer in effect, you don’t need to pay an Early Termination Fee.
Keep in mind that a Provider of Last Resort will have higher electricity rates than standard REPs. That’s why it doesn’t make financial sense to stick with your POLR. Instead, shopping around for a fixed-rate electricity plan with a new POLR will be the wiser move.