After this week’s outages, you may be thinking, “What if my electric provider suddenly goes out of business?”  Maybe you just received such a notice from your provider and it says you’re going to a POLR — provider of last resort.  

To begin, please know that your home or business will have an uninterrupted electric service thanks to a safety net called the Provider of Last Resort (POLR). That means, even if your Retail Electric Provider (REP) is no longer in the market, your home will remain powered.

How Does a Provider of Last Resort Work?

Every two years, the Public Utility Commission of Texas (PUC) designates the Providers of Last Resort in deregulated territories. POLRs are certificated REPs in the service locations of all public utilities in Texas.

The largest providers in an electric utility service area serve as POLRs; however, smaller REPS may also volunteer.

The eligibility criteria include providing information about their technical and financial capabilities to cater to an additional number of customers within a short time.

The POLR system offers continued service to Texas customers under rare circumstances, such as your current provider going out of business.

Sometimes, a customer can request POLR service. Furthermore, when you don’t exercise your power to choose an electric provider, the POLR will automatically become your energy supplier.

Why Do Texas Service Territories Have POLRs?

When energy deregulation took effect in 2002, public utilities in Texas had to give up their monopoly on the electricity market. Earlier, local utilities were in charge of selling and distributing electricity to consumers who had no choice but to accept it.

Here is the list of Texas utility companies, also called Transmission and Distribution Utilities (TDUs) or Transmission and Distribution Service Providers (TDSPs):

• American Electric Power (AEP Texas)
• CenterPoint Energy
• Oncor Electric Delivery
• Texas-New Mexico Power (TNMP)

TDUs are responsible for the maintenance of the electricity distribution infrastructure, such as wires and poles. Your TDU is who you contact in the case of an electrical emergency, e.g., power outage.

But the deregulated energy market allowed private players to enter. Residents in over 85% of Texas areas have the power to choose their own electric supplier.

Utilities now distribute power, while REPs compete for customers’ business with affordable electricity rates.

And then, policymakers wanted to separate utility companies from even becoming backup electric service providers. For this reason, they designed the POLR structure, which allows competitive REPs to step in times of need.

If your electric provider closes shop, the POLR in your location fills the gap in service. Therefore, POLRs act as your temporary REP and ensure that there is no power interruption.

Who is Your POLR?

Your Provider of Last Resort depends on your service territory and whether you receive residential or commercial energy.

For the sake of the POLR structure, customers are classified into four groups:

1. Residential
2. Small non-residential
3. Medium non-residential
4. Large non-residential

Retail energy is a competitive business and high-risk commodity. If your REP has not purchased enough energy to serve its customers, they have to buy more real-time electricity to meet the demand.

The Electricity Reliability Council of Texas (ERCOT) may demand higher collateral from your REP as the day-ahead market prices are risky.

If you are lucky, your REP may tie-up with another provider, where you will receive the electric supply on the original contract rates. Otherwise, your retailer may go out of business, and you transition to the Provider of Last Resort.

What to Do When Your Service Shifts to a POLR?

Before moving to the Provider of Last Resort, you will receive communications about your retail electric provider closing their business.

1. The PUCT will send a notification via mail that your REP will go out of business. The news also includes information that you are scheduled to receive service from the POLR.

Providing the correct contact information is crucial because the PUCT won’t contact you through other modes, such as email or phone.

1. Your existing provider may notify all customers about this change.
2. The POLR you are assigned to will send a notification letter containing the information about your new plan.

After 15 days, if you haven’t switched to another REP or a different POLR plan, you may pay a deposit to continue service from the POLR. If you stay on the Provider of Last Resort default plan, you have up to 60 days to switch to another provider free of charge.

The POLR rates will be higher than standard REP prices because of the sudden influx of customers and the resulting uncertainty. Furthermore, the volatile energy market causes the overall costs to soar.

So, it is wise to shop for a fixed-rate plan as soon as possible and be free of price fluctuation and meet your home or small business’ long-term needs.