Energy Provider of Last Resort

There’s an ominous sounding phrase. Actually it is a guarantee that no matter where or from whom you are purchasing energy you will be assured of delivery – as long as you pay your bill.
The deregulation of electricity followed that of the airlines (1978), telecommunications (1996) and natural gas (1992) as actions that were purported to be ways to reduce the costs of travel, telephone and energy.

As in all new industries, new electric marketing firms sprang up all around the country. Some were subsidiaries of electric utilities. Others were created by individuals or companies with little or no experience in the business of buying and selling of electricity.

The new laws and regulations made it possible for consumers at the retail level to buy their electricity from marketers offering lower rates than those available from the local regulated public utility.

The result was a considerable amount of confusion, especially in areas where the rates from the new marketers tended to increase to levels above those of the local utility and the consumer found that there were penalties for switching back to the utility. This was not universal but occurred often enough to become a matter to be considered by the various regulatory agencies involved.

However, the worst case scenario was when the new marketer (“supplier”) became insolvent or for any other reason could not continue to supply electricity to its customers. What protection was there for the homeowner and businessman whose need for electricity was almost as essential as that for air and water?

Lawmen to the rescue: In all the states, laws or regulations were enacted to protect the consumer against just such situations. The category of Provider Of Last Resort was established and mandated to assume the continued and uninterrupted supply of electricity to any consumer whose supplier failed for any reason to deliver power.

In some states, such as New York, the POLR is the local public utility in each area. In others, specific firms were identified and authorized by the state public utility commission to be available on instant notice as local POLRs. But in all cases the consumer is protected by federal and local laws against loss of electric service due to the failure of a supplier.

While the number of failing suppliers has decreased the POLR has rescued many consumers in the years of deregulation. And the protection remains and will continue.