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RESA Proposes Rulemaking To Establish Disclosure Requirements Applicable To Brokers, Other Third Parties

April 21, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Retail Energy Supply Association has recommended that the Public Utilities Commission of Ohio open a rulemaking, "with the goal of establishing disclosure requirements applicable to parties in a fiduciary relationship with a customer."

RESA made the recommendation in response to a petition from The Energy Professionals of Ohio (EPO), who, as first reported by EnergyChoiceMatters.com, are seeking clarification from PUCO that, among other things, rules requiring retail suppliers to disclose, "all prices and all fees associated with the service," require the disclosure of fees from non-broker independent agents, government aggregators, and other third parties that serve to connect retail customers with suppliers

RESA said that the disclosure rules could be improved to provide additional customer protections and transparency to the retail electric market.

"The reason is simple. The rules at issue in this proceeding relate to disclosures within competitive retail electric service ('CRES') contracts. But, the fees disclosed in the CRES contract are the result of relationships the customer has entered into with brokers or other representatives much earlier than the consummation of the agreement with the CRES provider. Disclosures in CRES contracts, thus, do not actually provide the customers with the information they need until after the arrangement between the customer and the broker is already entered into. This approach is backwards. Rather than placing the burden on CRES providers to regulate brokers and third parties, the focus should be on the disclosures that exist between parties in a fiduciary relationship with a customer at the time the relationship is formed," RESA said

"Thus, to provide greater transparency and consumer protection, RESA recommends that the Commission open a new rulemaking proceeding with the goal of establishing disclosure requirements applicable to parties in a fiduciary relationship with a customer," RESA said

"[T]he rulemaking could evaluate whether such [third] parties should disclose at the outset of the relationship with the customer any fees or termination fees that may apply," RESA said

RESA opposed The Energy Professionals of Ohio's motion that PUCO "clarify" that the broker fee disclosure rules only apply to residential and small commercial customers, as RESA said that the rules plainly provide that the fee disclosure provision only applies to residential and small commercial customers

"[A]s Rule 4901:1-21-12(B) expressly and unambiguously states that only CRES contracts with residential and small commercial customers must include the items listed under the rule, there is no reason why the Commission needs to 'clarify' this point for EPO," RESA said

RESA did say that it would be beneficial for PUCO to revisit the definition of a "small commercial customer" through a rulemaking proceeding, "to develop a threshold level that better matches the type of small commercial customer contract properly subject to fee disclosure."

Case No. 12-1924-EL-ORD

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