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Broker Asks New York PSC To Allow Model Under Which Broker Contracts With Customer, And Switches Its Contracted Customers To Broker-Selected ESCO Without Requiring Customer To Consent To Specifically Selected Product

Customer Contract With Broker Would Be Evergreen

September 20, 2017

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

In testimony in the New York PSC's evidentiary review of the retail energy mass markets, The O.E. Group asked the New York PSC to authorize a model under which brokers could enter into contracts with customers under which the brokers could select, on the customer's behalf, an ESCO, and be able to switch the customer to such ESCO without requiring additional customer consent (apart from the earlier broker-customer contract) to the specific ESCO product

The O.E. Group said that its testimony is not intended to preclude other contractual relationships between ESCOs and mass market (R&S) customers

"I am suggesting a process whereby Brokers would act on behalf of groups of R&S Customers to obtain quotes from several ESCOs for fixed-price electricity and natural gas products so as to be able to provide pricing to R&S Customers similar to pricing obtained by large commercial customers. This approach includes R&S Customers entering into contracts with Brokers that provide authorization to Brokers to select and sign up R&S Customers to a supply agreement providing the most favorable price then being offered among the quoting ESCOs," The O.E. Group's witness testified

"This approach would provide R&S Customers with an 'agnostic' Broker ...the role of the Broker that I am discussing in this testimony would have no ... exclusivity limitation, i.e., the Broker would be 'agnostic' and free to place R&S Customers with the ESCO quoting the best fixed price," The O.E. Group's witness testified

Under The O.E. Group's proposal "The R&S Customer would enter into a contract with the Broker providing that the Broker would conduct a bid or proposal review process and would be authorized to select and execute an agreement with the ESCO on behalf of the R&S Customer, providing the most favorable quote for the initial and subsequent ESCO contract terms."

"The form of contract between R&S Customers and Brokers would be on an evergreen basis such that it would continue from twelve (12) month term to twelve (12) month term which can be terminated on not less than forty-five (45) [sic] written notice before the end of each term. It would give the Broker authority to solicit quotes from not less than three (3) ESCOs for a group of R&S Customers and then to execute a contract on behalf of each R&S Customer in that group with the ESCO quoting the best price and terms. Before the end of each term, the Broker would again obtain quotes from not less than three (3) ESCOs and follow the above process to enter into a contract with the ESCO providing the best price and terms on behalf of all the R&S Customers in each group for the succeeding twelve (12) month period. Upon doing so, the Broker would send a notice of the selected price for the succeeding term to each R&S Customer in each group," The O.E. Group's witness testified

Most notably, The O.E. Group's witness testified that, "This notice of price would be for notification purposes but not to obtain consent from each R&S Customer in each group since doing so would be too cumbersome and costly for the Broker. To require individual consent would also defeat the purpose of acting on behalf of a group."

Regarding customer termination of the contract with the broker, The O.E. Group's witness testified, "Any R&S Customer may terminate its agreement with the Broker upon written notice to the Broker not less than forty-five (45) days prior to the end of each term."

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