A controversial PUC rule blocks some customers who get behind in their bills from obtaining electricity from any supplier.

A state policy that prevents some Texans from obtaining air conditioning or lighting for their homes has received a renewed endorsement from Public Utility Commission chairwoman Donna Nelson.

In an Oct. 18 letter, the state’s top energy regulator defended the PUC’s controversial “switch hold” rule, explaining that it balances the need to protect the electric market against bad consumer debt with the need to provide additional protections to vulnerable customers.

Under the switch-hold rule, the state blocks some customers with overdue electric bills from buying electricity from any provider in Texas until the debt is paid. The rule applies to deregulated electric customers entering into deferred payment plans and those entering into average payment plans with a delinquent bill.  The PUC’s switch-hold rule allows these accounts to be “flagged” and prevented from switching to new providers.  This quickly becomes dangerous as flagged switch hold customers get disconnected and cannot reconnect for extended periods of time.

Retail electric providers are vigorous proponents of the rule, which was adopted in April 2010 by the PUC. Consumer groups oppose it as anti-competitive and anti-consumer, saying that it puts state government in the heavy-handed position of becoming a bill enforcer for private companies.

PUC Chairwoman Nelson

But PUC chairwoman Nelson wrote that the switch-hold rule helps minimize bad debt, which can lead to higher rates for all customers. “I take the health and welfare of Texans very seriously … (and) I continue to believe that the Commission struck the appropriate balance when it adopted … is rule,” she wrote.

Her letter was in response to criticism leveled by State Rep. Sylvester Turner, who said the state’s switch-hold policy disproportionately harms the elderly and poor. He also said that it can result in longer service disconnections than would otherwise be the case without the policy.

In an Aug. 25th letter to Nelson, Turner wrote that it was “inexcusable” that the PUC had by that time not performed any analysis of the impact of the switch-hold policy.  “It is deeply troubling to me that the PUC’s switch-hold reporting requirements … collect no data that can confirm or deny that dangerously long disconnections are justified,” he wrote in the letter, which has only recently been posted on the PUC website.

— R.A. Dyer

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