9 Cents per kWh Before Energy and Delivery: The Maximum POLR Rate Texas Small and Midsize Businesses Face If Their REP Fails in 2027 or 2028
The PUCT approved the 2027-2028 provider of last resort roster on October 9, 2026. The price formulas behind it date to 2022, and for businesses they start at a 9 cent per kWh customer charge, while large accounts pay 125% of their own 15-minute real-time prices.
On October 9, 2026, the Public Utility Commission of Texas (PUCT) approved the providers of last resort (POLRs) that will pick up Texas customers whose retail electric provider (REP) fails during 2027 and 2028. For small and midsize businesses, the maximum POLR rate starts with a $0.09 per kWh customer charge, before the energy charge, TDU delivery charges, ERCOT fees and taxes are added. Large accounts of 1 MW and up face a different formula tied to their own 15-minute real-time prices, with no ceiling of its own.
Key takeaways:
- The PUCT approved the 2027-2028 POLR roster in Project No. 59209 on October 9, 2026, and the first POLR price labels for the new term are due December 18, 2026.
- Small and medium non-residential accounts pay a $0.09 per kWh customer charge plus 125% of the prior month's average real-time price for their load zone, capped at 160% of the prior month's energy charge.
- Large non-residential accounts pay $2,897 a month, $6.00 per kW of demand a month, and 125% of their own 15-minute real-time price, with a floor of $7.25 per MWh and no cap in the formula.
- Only one REP volunteered for the term, and no volunteer covers the large non-residential class.
What Happened
The PUCT signed a Notice of Approval in Project No. 59209 on October 9, 2026, designating the volunteer retail electric providers (VREPs) and large service providers (LSPs) that serve as POLRs for the 2027 through 2028 term, beginning in January 2027. The commission adopted Commission Staff's September 18, 2026 list without changes. Designated LSPs must file Electricity Facts Labels (EFLs) for each customer class and TDU area by December 18, 2026, then monthly before the 10th. The primary sources are the Notice of Approval and Staff's final recommendation.
POLR service is split into four classes (residential, small non-residential, medium non-residential and large non-residential) across five TDU areas: Oncor, CenterPoint, AEP Texas Central, AEP Texas North and TNMP. Lubbock's LP&L runs its own separate process. According to EnergyChoiceMatters, only one REP volunteered for the term. It covers residential and small non-residential customers in every area and medium non-residential customers everywhere except AEP Texas North. No volunteer signed up for the large non-residential class. Staff's list names no more than 15 LSPs in each class and area.
The roster is new. The price formula is not. The maximum LSP rates sit in 16 TAC §25.43, in the version effective November 23, 2022 (Project No. 53820). Older summaries online still describe a POLR price set by bidding or tied to a "price to beat." That is not how the current rule works.
The PUCT describes the service plainly on its POLR page: "POLR service is relatively high-priced, due to the costs associated with planning and the risk of serving an uncertain number of customers with uncertain electricity loads." The same page says the service "is intended to be temporary and used only under rare circumstances." As of October 28, 2026, that page still lists 2025-2026 term labels and only the preliminary 2027-2028 lists.
One related rule moved the same week. On October 15, 2026, the commission adopted amendments to 16 TAC §25.107 in Project No. 59288, which change how REPs file the irrevocable stand-by letters of credit they post as part of certification. New letters go to electronic filing in Project No. 37919 on an updated template. Existing paper letters must be e-filed by March 5, 2027, and the prior template is allowed until August 15, 2027. A decrease in a letter's face value takes effect only after written commission acceptance.
Impact on Commercial Electricity Buyers in Texas
The POLR rate a business pays depends on its class, and the rule sets three different price shapes. Small and medium accounts get a lagged, capped formula. Large accounts get real-time prices with no ceiling in the formula. And which provider you land with decides whether the formula applies for long.
Small and medium accounts: a lagged, capped formula. Under §25.43(m)(2)(B), the LSP rate equals non-bypassable charges plus an LSP customer charge plus an LSP energy charge, divided by kWh used. The customer charge is $0.09 per kWh. The energy charge, reset on the 10th of each month, is the prior calendar month's average real-time settlement point price (RTSPP) for the applicable load zone, multiplied by 125%. It cannot exceed 160% of the prior month's energy charge. Non-bypassable charges carry every TDU charge for the class, plus ERCOT administrative charges, nodal fees, RUC capacity-short charges and taxes.
The most recent small non-residential POLR label on the PUCT's page for the Oncor area, effective August 10, 2026, shows an energy charge of 3.82 cents per kWh. Its all-in average prices are 18.4 cents at 1,500 kWh, 20.4 cents at 2,500 kWh and 20.1 cents at 3,500 kWh. That label also lists an LSP demand charge of $2.00 per kW a month, or $50 a month without a demand meter. The current (m)(2)(B) text has no demand charge line, so the filed label, not the rule alone, is the document to read for an actual price.
Set the REP-side pieces against the market. The $0.09 customer charge plus that 3.82 cent energy charge comes to 12.82 cents per kWh. The TxCP Commercial Rate Index (TCRI) stood at 7.04 cents per kWh across 14,223 tracked plans for the week of October 26, 2026. Neither figure includes TDU delivery charges, so POLR's energy side runs about 1.8 times the market.
Large accounts: real-time prices, no ceiling in the formula. Section 25.43(m)(2)(C) charges a large non-residential account a $2,897.00 customer charge a month, a demand charge of $6.00 per kW a month, and an energy charge equal to the account's own 15-minute RTSPP multiplied by 125%, with a floor of $7.25 per MWh. There is no prior-month lag and no 160% cap. In our illustration of a site with 1,000 kW of billed demand using 400,000 kWh a month, the customer and demand charges alone add $8,897, about 2.2 cents per kWh, before energy and delivery. A 15-minute interval that settles at $1,000 per MWh would bill at $1,250 per MWh for that interval. How high scarcity prices can run is shaped by ERCOT's offer-cap programs, which the PUCT opened for a five-year review, and winter mornings are where ERCOT now sees the most risk, as our December outlook briefing covers.
Assignment and the day-61 move: who you land with matters. In a mass transition, §25.43(l) has ERCOT assign customers to volunteers first, up to the number of accounts each volunteered for, then spread the rest across LSPs in proportion to their retail sales in MWh. A volunteer serves on a market-based month-to-month product rather than the LSP formula, under §25.43(m)(1). If you land with an LSP, §25.43(j)(4) requires it to move residential and small non-residential customers to a market-based month-to-month product no later than the 61st day of service or the next billing cycle after day 60. That provision does not extend to medium or large non-residential accounts, so for those classes the rule sets no automatic move off the formula rate.
| As of | POLR class | Peak demand, prior 12 months | Customer charge | Demand charge in rule | Energy charge | 2027-2028 volunteer | Day-61 move required |
|---|---|---|---|---|---|---|---|
| 2026-10-28 | Small non-residential | Under 50 kW | $0.09 per kWh | None | 125% of prior-month load-zone average RTSPP, capped at 160% of prior month | Yes, all five areas | Yes |
| 2026-10-28 | Medium non-residential | 50 kW to under 1,000 kW | $0.09 per kWh | None | 125% of prior-month load-zone average RTSPP, capped at 160% of prior month | Yes, except AEP Texas North | No |
| 2026-10-28 | Large non-residential | 1 MW and up | $2,897.00 per month | $6.00 per kW per month | 125% of the account's 15-minute RTSPP, floor $7.25 per MWh | None | No |
The POLR Exposure Check: Three Questions Before Your Next Renewal
A REP failure is rare, but the price you would land on is set in advance by your meter's class, so three questions settle most of your exposure before your next renewal. We use this check when we read POLR filings for commercial accounts.
1. Which POLR class is your meter in?
Pull your highest demand reading from the past 12 months. Under 50 kW is small non-residential, 50 kW up to 1,000 kW is medium, and 1 MW or more is large. A large site is in the only class with no volunteer for 2027-2028, so in a mass transition it goes to an LSP on the real-time formula.
2. What does your contract do at expiry or on a holdover?
Read the expiration clause in your agreement and EFL. Note whether the account rolls to a month-to-month or holdover rate, how that rate is priced and how much notice you get. POLR only matters if your REP exits, but the holdover clause applies every time a term ends, and our fixed versus variable guide explains how those rates behave.
3. What date will you have a backup quote in hand?
The fastest way off a POLR rate is a switch to a competitive plan, and §25.43 requires POLR notices to tell customers they can speed a switch by requesting a special or out-of-cycle meter read. Keep a current quote for your meter from a second provider, so a switch is one call rather than a shopping project.
What You Should Do
Turn the October 9 approval into five concrete steps this quarter, whether your contract renews soon or runs well into 2027, so a REP exit would cost you days on the backup rate rather than months.
- Find your peak demand for the past 12 months and write down your POLR class and TDU area.
- Mark December 18, 2026, when the first 2027-2028 POLR labels are due, and read the label for your class and area once the PUCT posts it.
- If your site peaks at 1 MW or more, price one recent winter month at the large-class formula using your own interval data, so you know what a week on POLR would cost.
- Keep a dated backup quote from a second REP, and compare it with current offers for your territory in our data download.
- Read your contract's expiry and holdover terms, and set a reminder 90 days before the end date.
Questions to Ask Your REP or Broker
These questions show how exposed your account would be if your provider left the market, and how quickly you could move if it did. Ask them at renewal, when you have the most leverage.
- Which POLR class and TDU area is my account in, and what peak demand reading puts it there?
- If you stopped serving the Texas market, how would you notify me, and how fast could I switch to another provider?
- What happens to my rate at expiry, and is any holdover rate fixed or tied to wholesale prices?
- For a large account: what would one recent winter month have cost me at 125% of my 15-minute real-time prices?
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For how the provider market itself is structured, see our guide to commercial electricity providers in Texas.
Frequently Asked Questions
What is the POLR rate for a small business in Texas?
For small (under 50 kW) and medium (50 kW to under 1,000 kW) non-residential accounts, the maximum POLR rate under 16 TAC §25.43(m)(2)(B) is a $0.09 per kWh customer charge plus 125% of the prior month's average real-time price for the load zone, capped at 160% of the prior month's energy charge, plus TDU, ERCOT and tax charges. The posted Oncor small non-residential label effective August 10, 2026 averaged 18.4 cents per kWh at 1,500 kWh.
Who are the Texas providers of last resort for 2027 and 2028?
The PUCT approved the 2027-2028 roster on October 9, 2026 in Project No. 59209, adopting Staff's September 18 list without changes. One REP volunteered, for the residential and small non-residential classes in every area and the medium non-residential class everywhere except AEP Texas North. Staff's list names no more than 15 large service providers in each class and TDU area.
How long does a business stay on the POLR rate?
For small non-residential accounts served by a large service provider, 16 TAC §25.43(j)(4) requires a move to a market-based month-to-month product by the 61st day of service or the next billing cycle after day 60. That provision does not cover medium or large accounts. Any customer can leave POLR service sooner by switching to a competitive plan.
When will 2027 POLR prices be published?
Designated large service providers must file Electricity Facts Labels for each class and TDU area by December 18, 2026, then monthly before the 10th, under the October 9, 2026 Notice of Approval. As of October 28, 2026, the PUCT's POLR page still shows 2025-2026 term labels.