If your electric company goes out of business or can no longer provide you with service, you will be switched to a Provider of Last Resort (POLR). The PUC designates a POLR for each region of the deregulated Texas electricity market. The provider of last resort is an electric company that agrees ahead of time to take on any customers of a failed electric company in a particular area. This is meant to be a safety net to make sure that customers still have lights if their chosen electricity provider fails.
If you find yourself switched to a POLR your electricity rates will jump immediately. A switch to a POLR will keep your lights on but you will want to choose a new provider as soon as possible.
High electricity rates for Providers of Last Resort
Electricity providers typically are able to forecast how much power they must buy from electricity producers in order to serve their client base. This allows them to make long term purchase agreements and hedge themselves against near term price volatility in the wholesale electricity market.
Electric companies that agree to be a designated POLR are taking on risk. This is because they could suddenly find themselves responsible for selling electricity to thousands of new homes and businesses without having the proper hedging in place. They might have to pay the current market wholesale rate to procure the electricity needed by the sudden new influx of customers.
Because of this, the electricity rate you will be charge by a POLR is based on the current or spot price of electricity. These rates will likely be much higher than whatever rate you had under your old fixed rate plan.
On top of the higher rate, you may be asked to pay a deposit by the POLR that takes on your business. You will have a 15 day grace period on the deposit requirement.
Here are the POLRs by region in Texas for residential customers. The POLRs for businesses could be different.
|CenterPoint||Houston, The Woodlands, Sugar Land||TXU Energy||See EFL|
|Oncor||Dallas, Fort Worth, North Texas||Reliant Energy||See EFL|
|AEP Central||Corpus Christi, McAllen||TXU Energy||See EFL|
|AEP North||San Angelo, Abilene||TXU Energy||See EFL|
|TNMP||Lewesiville, Glen Rose||TXU Energy||See EFL|
The POLR system is meant to be an emergency measure to prevent Texas electricity consumers from losing power because their provider goes out of business or becomes insolvent. Customers who find themselves switched to a POLR should act immediately to shop for cheaper electricity rates.