What Happens If My Electricity Provider Goes Out of Business

If your residential electricity provider (REP) goes out of business in Texas, don’t worry — your home will not lose power.

Instead, your home’s electricity will be switched to what is called a Provider of Last Resort, or POLR. This is a system implemented by the Electric Reliability Council of Texas (ERCOT) and executed by the Public Utility Commission of Texas (PUCT) to ensure that Texas homeowners and renters do not suffer a power outage if their provider shuts down.

POLRs are not meant to act as long-term electricity service providers. Rather, they are meant to be a temporary stopgap to ensure you don’t lose your connection to the Texas power grid.

You will not lose power if your residential electricity provider goes bankrupt or stops providing service to your area
You will be notified by the PUCT and your current provider of the switch to a POLR ahead of time
You may switch to another provider or plan within 60 days without paying a penalty, such as an early termination fee (ETF)
Your provider must return any unused portion of an electricity deposit if you paid one
POLR rates are typically more expensive because they assign you to a month-to-month plan

Who is your Provider of Last Resort (POLR)?

Providers of Last Resort are designated by the PUCT and assigned by the TDU region. Here are the current Texas POLRs:

Oncor – TXU Energy
CenterPoint – Reliant Energy
AEP Central – Reliant Energy
AEP North – Reliant Energy
TNMP – Reliant Energy

What happens to your electricity deposit?

If you paid an electricity deposit at the start of your contract with the original provider, they are required to pay any unused portions of the deposit back to you.

If for any reason, you have any outstanding credit balances, they will be returned to you as well.

In the situation where you owe money to the provider, you may be required to finish paying off your debt.

When to switch to a new electricity provider

You have a 60-day window to choose a new provider and plan. It is highly recommended to switch away from your month-to-month plan assigned by your POLR as soon as possible for two main reasons.

Month-to-month plans are typically several cents per kWh more expensive, and the rate changes each month
If you do not switch within the 60-day window, you may be required to pay a costly early termination fee (ETF)

To secure savings on your energy bill, start searching for a new provider as soon as possible. We advise Texans to enroll in a simple, fixed-rate electricity plan without base charges or usage fees.

Why are POLR plans more expensive?

When a POLR signs on new customers to these month-to-month plans, they are assuming a lot of risk.

In a more typical new customer acquisition situation, a provider will purchase energy in advance based on the term length a customer signed up for (e.g. 12, 24, or 36 months).

When a POLR receives a new customer on a month-to-month contract, they do not know how long the customer will remain on the month-to-month contract. So it is more difficult to buy energy in advance. This leads to higher energy charges on month-to-month plans compared to long-term fixed-rate plans.

How to select your new energy plan

When shopping for a new electricity plan in Texas, there are many things to look out for in order to find the plan that will help you save the most money.

Avoid plans with monthly base charges
Stay away from plans with usage fees
Watch out for high early cancellation fees
Choose a fixed rate plan instead of a variable rate to lock in a rate for the duration of your contract
Watch out for gimmicky plans like bill credits, free nights, and free weekends — these plans may sound like a good deal, but for most Texans, they lead to higher bills than you’d expect

The most important thing to remember? Always, always, always check the Electricity Facts Label (EFL) before signing up for an electricity plan.

Find affordable electricity with BKV Energy

If your previous electricity provider has gone out of business and you’re looking to switch from your POLR (provider of last resort), consider BKV Energy.

We are proud to offer Texans simple, transparent, and affordable fixed-rate electricity that can help you save up to $500 or more per year.

Choose our Bluebonnet plan and enjoy BKV Energy Plus benefits at no cost, the most power-packed benefits program in Texas.

Enter your zip code to explore plans in your area.

Written by Graham Lumley

Graham Lumley is the Growth Product Manager at BKV Energy, a retail electricity provider in Texas' deregulated market, where he has worked since 2023. He analyzes customer usage and billing data, helps develop BKV's fixed-rate plans, and creates tools to simplify Texas electricity shopping. He has written over 200 articles on Texas electricity rates, delivery charges, plan types, energy generation, and more to help Texans understand their bills and pay less. With over 10 years of experience in consumer products, marketing, and energy, he explains the Texas electricity market in plain language.