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On May 5, 2026 Texas PUC Staff filed an updated recommended proposal for publication regarding amendments to 16 Texas 2 3 4 Administrative Code (TAC) §25.107 relating to Certification and Obligations of Retail Electric Providers (REPs). The commission also proposed amendments to three commission-prescribed forms: (1) the REP Letter of Credit template; (2) the REP Application and Amendment Form; and 5 (3) the REP Reporting Instructions Form.

In response to the proposed amendments the Texas Retail Energy Provider (REP) Coalition filed comments on May 21, 2026 reminding the TPUC  that its organization represents the only subset of market participants affected by the proposed rule changes.

In its comments the Texas REP Coalition, among other things, cautioned the Commission that proposed changes to the letters of credit (LOC) for REP to meet certification requirements may result in fewer financial institutions willingness to offer such instruments.

Texas REP Coalition – Executive Summary of Texas Rep Coalition’s Comments is provided below:

The proposed changes to 16 TAC § 25.107 must be read in conjunction with 16 TAC § 22.71(d)(1)(A), which eliminated the option to physically file an LOC and directed any REP with a physical LOC on file to “file an original letter of credit electronically” by March 5,2027.

The Commission should maintain the option to physically file an original LOC.

The March 5,2027 compliance should be the deadline for REPs with a physical LOC on file to file an electronic copy of that LOC, including a scanned PDF. Interpreting this deadline as a deadline for REPs to obtain and file new LOCs using the newly adopted standard form LOC will impose significant costs on REPs who will have to provide the capital needed to obtain the new LOC and maintain the existing LOC until it is cancelled.

Any changes to the Commission’s standard form LOC should be made with two overarching principles in mind: (a) the language in the LOC should be acceptable to the largest number of financial institutions possible to allow REPs to obtain LOCs at competitive rates; and (b) financial institutions are regulated entities that must conduct their business in a compliant manner such that they are not always willing to make changes to their approved forms and processes to satisfy Commission requirements applicable to REPs.

Although not identical, the section of the proposed LOC addressing draws by the Commission is modeled after the ERCOT LOC. ERCOT allows the submission of a physical copy of an LOC in addition to submission of an electronic LOC or PDF LOC via email. Because this differs from 16 TAC § 22.71(d), it is not a foregone conclusion that a financial institution that has agreed to language in ERCOT’s form LOC will agree to the same or similar language in the Commission’s LOC because the financial institution will not have the assurance that the physical original LOC is also maintained by the Commission.

Attachment A includes an anonymized sample of redlines to the proposed standard form LOC provided by several financial institutions. The range of redlines indicate that fully electronic LOCs and a draw on an LOC executed via email are yet a standard industry practice. The TEF standard form LOC appears to acknowledge this.

Proposed 16 TAC § 25.107(f)(4)(F) should be amended to state that an LOC must substantially comply with the Commission’s standard form irrevocable stand-by LOC.

Proposed 16 TAC § 25.107(f)(4)(F)(iii)(I) should be amended to permit a financial institution to determine who has the authority to sign an LOC.

In the event the Commission moves forward with an electronic-only process and a physical LOC is received, it is inappropriate for the Commission to destroy a valid financial instrument due solely to an administrative issue regarding filing procedures as allowed under proposed 16 TAC § 25.107(c)(7)(B).

A REP should have the option to obtain a surety bond to satisfy requirements related to access to capital and/or customer deposits/prepayments.