HOUSTON – After nearly 20 years in business in the state of Texas, it's lights out for Breeze Energy.
The Electric Reliability Council of Texas pulled the plug on the power provider Wednesday after it learned the company was not meeting mandated financial requirements to remain feasible.
But that also meant the process to immediately shift nearly 10,000 customers to other providers was initiated without the rates those customers had negotiated with Breeze. Those new providers are referred to as "providers of last resort" or "POLR."
"The provider of last resort picks those customers up to maintain continuity of electricity supply," says Jesson Bradshaw, CEO of Energy Ogre -- a company that assists customers in purchasing energy plans.
Bradshaw says former Breeze customers may not notice a change in providers because they never lose power -- so their bills could rise for weeks or months before they realize a change even occurred.
"The pricing that folks might see with the POLR provider is more than likely gonna be different from what they were paying the previous provider that had to transition those customers away," Bradshaw said.
Of the 9,800 customers affected, nearly half were in the CenterPoint coverage area. Those folks can expect to be notified by mail -- but need to act fast to avoid a higher-than-normal bill.
"It's definitely important to look for another plan to get yourself into something on a fixed-priced basis," Bradshaw advises, "or have a plan to transition over to something else."
Bradshaw says the Breeze shutdown by ERCOT is a rare occurrence, but prices are rising higher because some large power plants in the system recently have been retired. Those closings combined with an expected very hot summer could tighten the supply and demand balance, so he wouldn't be surprised if another power company finds itself in this same situation as Breeze.
Below is a Q&A with information from the Public Utility Commission:
Did “Breeze Energy” go belly up today affecting some 10,000 electric customers?
Breeze Energy has defaulted with respect to its Standard Form Market Participant Agreement (SFA) with the Electric Reliability Council of Texas (ERCOT). As a result, approximately 9,800 Breeze customers are being transitioned to one or more retail electric providers (REP) to keep their power on
What is the geographic area of the customers affected?
Breeze customers are located across most of the transmission and distribution providers’ service areas in Texas.
How does such a closure impact customers?
When a retail electric provider like Breeze defaults in this fashion, their customers are transitioned to one or more retail electric providers known as Providers of Last Resort (or POLR, pronounced “polar”). Because these retail electric providers are allowed to set their rates based on the ERCOT market prices, the customers may be exposed to higher prices in the absence of a contract. We encourage customers to talk to the POLR provider to see if a lower rate plan is available or the customer can visit www.PowerToChoose.org to find a retail electric provider with a lower rate plan.
What happens to the customers?
Affected customers are free to move to other retail electric providers who may offer more favorable rates and contracts without paying the POLR an early termination fee. These customers can visit PowerToChoose.org, enter their selection criteria, and choose a power plan that suits their situation. If they have complaints, customers are encouraged to call the PUC’s Consumer Hotline at 888-782-8477.
Will their electricity be cut off?
Customers’ electric will not be cut off during a transition to a POLR providers.
Are they arbitrarily reassigned to another electric company, or do they have options?
Initially, customers are randomly assigned to a POLR provider, but they are free to shop for a plan that better suits their needs and avoid the potential rate increase.
How does an electric utility fail?
Retail Electric Providers must meet a variety of obligations to remain in business, including sufficient collateral to transact in the wholesale market. Companies unable to meet those commitment levels can end up in default within three working days.
What are the warning signs for customers?
Typically there are no advance communications to customer that a REP is in danger of default. However, the transition decision, once made, moves quickly to ensure customers can keep their lights on as they search for a suitable plan.
What else do customers of this and other electric companies need to know at this point in time?
The most important thing any customer in a competitive market area like Houston should know is that they have a choice when it comes to how they power their homes and businesses. Retail electric providers are competing to win and keep their business, so consumers can exercise choice to keep the lights on and the price of electricity at a manageable level. Again, if they’ve been assigned to a POLR, the Commission encourages customers to visit www.PowerToChoose.org to find a plan that suits their life.
How many of Breeze Energy's 9800 customers are in the CenterPoint area?
Approximately 4,200 customers.
What is the current average POLR rate? We are hearing about 17 cents a kilowatt.
As competitive businesses, each of the POLR entities are free to set a rate up to the market-based cap, but the POLRs are free to charge less and many choose to do so. In that regard, we couldn’t estimate an average.
So those customers who are switched to the POLR can switch away as soon as they choose another provider, right?
That is correct and they can do so without early termination fees.