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Retail Suppliers Recommend New York PSC Should License Brokers

September 28, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

Multiple retail suppliers have proposed to the New York PSC that the PSC should license energy brokers, rather than attempting to regulate brokers through ESCOs.

As previously reported, in response to an increasing number of complaints relating to brokers, New York PSC Staff proposed to modify the Uniform Business Practices to require ESCOs to identify and provide contact information for entities, including energy brokers, which market to customers on behalf of the ESCO, or sell lists of potential customers to the ESCO. Staff, however, did not propose that brokers be required to be licensed by the PSC.

Retail suppliers objected to the proposed reporting requirement, suggesting that it would be more efficient for the PSC to license (or "register") brokers

"Staff may be missing the intended target with this proposal," the NRG Energy retail companies said. "During the recent technical conference in this proceeding Staff described its objective as wanting to know which brokers are active in the market for purposes of pursuing complaint resolution. Energy brokers typically do not work for a single ESCO, but rather solicit offers or bids from multiple ESCOs on behalf of customers. ESCOs have no control over such entities. The Commission’s objective would be better served by requiring brokers to register with the Department."

The Retail Energy Supply Association called Staff's proposal, "inadequate," and said that the proposal, "fails to address a key problem associated with 'energy brokers.'"

"There are entities that are engaged by ESCOs to directly market to customers on their behalf to sell products and services. However, there is also another ubiquitous group of companies that essentially act as Customer Representatives. They solicit customers to act as their representative to solicit bids from ESCOs. In this situation, the ESCO has no control or agency relationship with such Customer Representatives or independent intermediaries. Nonetheless, much complaint activity emanates from the activities of these entities. The Staff proposal does not address this problem at all," RESA said

"Moreover, while Staff apparently recognizes the problems emanating from brokers that essentially act as middlemen, the proposed solution of simply adding an additional reporting requirement upon ESCOs does little to incentivize these entities to operate in a correct and proper manner. At a minimum it would seem reasonable that any entity that engages as an Energy Broker should be required to register with the Commission," RESA said

The National Energy Marketers Association suggested that, "To properly address the problem identified by Staff, NEM suggests that the Commission may wish to consider whether some form of minimal registration of energy brokers is necessary to serve the public interest. The registration of brokers would be consistent with the practice adopted in other neighboring jurisdictions. Such registration is not necessary for an ESCO’s employees and their exclusive agents in any given utility service territory, or MLM representatives for whom the ESCO is and should remain directly responsible. The registration process could be as straightforward and low cost as requiring these individuals to file their names and contact information with the Commission to produce a unique identification number that would be presented to a residential consumer during direct sales or marketing activities and would permit the actions of these individuals to be traceable by the Commission as well as the industry in the case of a pattern of complaints."

Exelon likewise opposed the proposed reporting requirements for ESCOs, stating, "The PSC has authority over Energy Brokers. Any entity engaged as an Energy Broker should be required to register directly and independently with the Commission."

Related Stories:

PSC Staff: "Increasing Number Of Complaints" Allege Brokers Providing "Inaccurate Or Misleading Information"

New York PSC Staff Propose Requiring ESCOs To Use Standard Contract for Residential Customers, Would Also Standardize "Key Provisions" of C&I Contracts

New York PSC Staff Propose New Definition of "Fixed Price", Eliminates Change-In-Law Pass-Throughs

New York Staff Propose Requiring Minimum Risk Management Experience for ESCO Licenses, Would Require All ESCOs To Re-Apply for Licenses Under New Standards

NRG: ESCOs Should Not Be "Learning On The Job," Proposes Stricter Eligibility Requirements

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