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Broker Alleges Competitor Engaging In Brokering Muni Aggregations Without License

Allegations Re-open Dormant Question of What Services Require Licensure As Broker/Aggregator


April 11, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Trebel, LLC has filed comments with the Public Utilities Commission of Ohio asking that PUCO deny the applications of Regor Energy Corporation for electric and natural gas broker/aggregator licenses, as Trebel, LLC alleged that Regor offered competitive retail services (specifically presenting rates to governmental aggregations, selecting a supplier, creating municipal aggregations, and related services) without a valid certificate issued by the Commission.

However, the allegation that Regor engaged in offering competitive retail services without the requisite license is premised on its alleged assistance and activities related to municipalities conducting opt-out aggregations. Notably, under PUCO precedent, a company may act as a consultant to a municipal aggregation without a competitive retail services (broker/aggregator) license, and the need for a broker/aggregator license is dependent on the specific services provided.

In Case 99-1609-AU-ORD, PUCO held that consultants need not be licensed, except in cases where they provide a "competitive service."

In a 2011 complaint case against Palmer Energy Company filed by Buckeye Energy Brokers, Inc. (Case 10-0693-GE-CSS), in which Buckeye Energy Brokers had alleged that Palmer Energy had engaged in brokering without a license due to its consulting for municipal aggregations (a complaint which PUCO dismissed based on the specific facts of the case), PUCO further said that a company is deemed to provide competitive retail service either by being in the business of supplying such service, or in the business of "arranging" for the supply of the service.

In the 2011 case, PUCO said that, to be involved in "arranging" for the supply of competitive retail service, "an entity must be engaged in activity that exceeds the level of involvement of a consultant."

"Arranging" for supply, PUCO said in 2011, would include, "engaging in the ultimate decision making process and entering into contractual obligations on behalf of its [a company's] clients with respect to the provision of a competitive service."

In the factual record of the Palmer case, PUCO found that Palmer Energy's development, issuance, and evaluation of RFPs for governmental aggregators did not constitute a competitive retail service which required a PUCO license.

In its 2011 decision, PUCO agreed, "there is ambiguity relative to distinguishing the activities of consultants and brokers," and indicated that it would consider developing a bright-line standard in a future rulemaking. Although there have been retail rulemakings since that time, Matters does not believe the question of a bright-line test for broker licensure has been resolved.

An appeal of PUCO's 2011 decision by Buckeye Energy Brokers was denied by the Supreme Court of Ohio

See our prior story for a full discussion of PUCO's 2011 decision

As to Trebel's filings with PUCO, Trebel alleged, in comments on Regor's application for a natural gas broker/aggregator license, that "Regor has been soliciting townships and municipalities to provide them with CRNGS [competitive retail natural gas supply] services, which have been previously, and are currently, provided by Trebel."

Trebel points to Regor's natural gas license application, in which Trebel alleged that Regor, in describing Regor's current activities, stated that Regor, "engages with municipalities in creating natural gas aggregation programs," to, "include ballot initiatives, certification, and choice in the selection of a retail electric supplier."

Trebel alleged that Regor's gas license application stated, "Regor Energy assists municipalities in certification renewal and reselection of a retail natural gas supplier."

Trebel further alleged that at a Dennison Village council meeting, a Regor representative had, "presented electric and natural gas rates for the village to consider," and also alleged that Regor, "presented Council with contracts which Council voted to accept after the solicitor reviewed them."

Trebel alleged that at one Dennison Village meeting, when a council member asked Regor's representative if Regor was licensed, Regor's representative allegedly replied that it was in the process of getting licensed and that, "I am allowed to work off of others [sic] certifications."

"Trebel is not aware of any rule or authority which permits a person and/or entity to share or 'work off of' another CRNGS' certificate," Trebel said

Trebel alleged that through the statement of Regor's representative, "Regor attempted to mislead and deceive Dennison Village into believing that Regor had authority to offer and contract for competitive retail natural gas services in violation of Rules 4901:1-29-02(A)(3)(c) and 4901:1-29-03(A), Ohio Adm. Code."

"Regor's actions are a clear violation of Ohio statutes and Commission rules. First, by offering, contracting, or attempting to contract with entities to supply competitive retail natural gas service to Dennison Village (and presumably others), Regor provided CRNGS services as defined by Section 4929.0l(J), Revised Code, without first being certified by the Commission in violation of Section 4929.20(A), Revised Code, and Rule 4901:1-27-03(A), Ohio Adm. Code," Trebel alleged

However, Trebel's comments fail to cite at any point PUCO's seminal decisions in Case 99-1609-AU-ORD or in Case 10-0693-GE-CSS concerning whether consultants need to be licensed.

Other than broadly alleging that the alleged behavior by Regor amounts to competitive retail service, Trebel also fails to present specific allegations that Regor's activities amount to the "arranging" for supply, which requires licensure, as opposed to the consulting behavior PUCO has previously said does not require licensure.

Trebel said in its comments that PUCO should assess forfeitures against Regor for the alleged violations

"When CRNGS providers, including aggregator/brokers, are left unregulated and the Commission's rules go unenforced, the uncertified providers are permitted to unfairly compete with certified CRNGS providers who follow Ohio statues and Commission rules and go through the time and expense of compliance," Trebel said in its comments

Regor Energy provided the following statement to EnergyChoiceMatters.com, "In regards to Trebel's filings, we will be responding accordingly through our legal counsel; all issues will be clarified and Regor vindicated from the allegations."

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