What happens if your Retail Electricity Provider (REP) were to suddenly go out of business? In Texas, thanks to the Provider of Last Resort (POLR), your lights will stay on. But, your bill will go up dramatically! In this article, you’ll learn about the POLR, and why you should immediately shop for electricity if the POLR becomes your provider.
What is a Provider of Last Resort (POLR)?
In Texas, the Provider of Last Resort (POLR) becomes your electricity provider if your current Retail Electric Provider (REP) exits the market for any reason. The POLR is basically a safety net if your REP were to go out of business. Electricity service from a POLR is intended to be temporary so that you do not experience an interruption in service. It is only used under rare circumstances when a REP is unable to provide service.
The PUCT designates Providers of Last Resort (POLR) as back-up electric service providers in each area of Texas open to competition. POLR service is relatively high-priced, due to the unknowns of uncertain number of customers with uncertain electricity loads.
What Happens if my REP Goes Out of Business?
Retail Energy is a high risk commodity business. REPs must procure power wisely, and ensure that they have enough power for their customers needs. If they don’t have sufficient cash reserves or collateral, they may have to go out of business. If an REP has not purchased enough electricity to serve their customers, they are forced to purchase real-time electricity to meet their customer’s needs. This is a costly mistake for an REP, especially when wholesale electricity prices are high.
If you’re very lucky, your current REP will enter into an agreement with a secondary provider, as a form of insurance. Basically, your account will be sold to another provider. The name on your bill will change, but your contract rate would be honored. That’s the ideal scenario, but it’s one that few people will ever see. Most often, if your REP goes out of business you will be served by the POLR.
Who is my POLR?
The Texas POLR list is subject to change every two years by the PUCT. The largest providers in each delivery area are required to serve as a POLR and smaller providers may volunteer to participate. See who the current Provider of Last Resort (POLR) is for your area.
POLR – The Electric Company Backup System
The Public Utility Commission of Texas (PUCT) has a backup plan designed to make sure the lights don’t go out when a REP goes out of business. When REPs go out of business, their customers are automatically switched to the POLR in their area.
The good news is that you’ll always have power to keep your lights on and your air conditioning running. You’ll get a notice from the PUCT that your REP is going out of business and that you’re scheduled to be moved to your POLR. You might get this notice via mail, email or telephone call. Once you receive notification that you’ve been dropped to POLR, you have 60 days to choose a new retail electric provider.
If this happens to you, be alert… and immediately shop for a new retail electricity provider. Because the bad news is, you’ll be served on the POLR market price.
Why Choose a New REP?
Safety nets are effective, but they’re not cheap.
POLR rates are calculated based on the cost of electricity on the open market, called the Real Time Settlement Point Price.
They are month-to-month rates, which means they can fluctuate. You would have absolutely no way to budget for your power bill. And, with summer prices expected to be high, month-to-month rates would be expensive.
If you find out you are being moved to the POLR, immediately start shopping around for a new electrical provider. Your POLR may require a deposit to be provided after 15 days of service if you have not selected another plan with your POLR or switched to another REP.