Procurement Consultant Tells Regulator To Require Disclosure Of Retail Energy Broker, Acquisition Fees To Customers
March 7, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
The following story is brought free of charge to readers byEC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com
SourceOne recommended to the Massachusetts DPU that broker and similar fees related to a retail energy sale should be disclosed to residential and commercial customers.
"In the same way that the financial products industry requires disclosure of brokerage fees, the Department should require that all discretionary fees be clearly disclosed in the contract," SourceOne said in its comments
"Both residential and commercial customers should have the right to know how the broker, sales representative, or 1099 independent agent they are speaking with is compensated," SourceOne said
"This simple disclosure could do a great deal to clean up the market and keep some of the industry’s worst actors from garnering egregious fees from often unsuspecting customers," SourceOne said
SourceOne said that its recommendation (and others made in its comments) should apply to small commercial as well as residential customers
"In many ways, small commercial customers are more prone to disingenuous sales tactics. This is because they likely face the same informational disadvantages as residential customers, but they have fewer consumer protections and they represent a more lucrative commercial opportunity to the salesperson due to higher consumption and fee-based revenues. This is why the disclosure of fees being paid to a brokerage company or being added by a sales representative should be required on the contract. For example, both brokers and direct employees of a competitive supplier should be required to include his or her per unit fee ($/kWh) or per contract fee ($/contract signed) on the contract," SourceOne said
SourceOne describes itself as, "one the largest buy-side commodity consulting firms serving commercial, industrial, and municipal clients in Massachusetts."
In its comments, SourceOne also stated, "The [Mass.] Attorney General raises many valid points in her critique of the residential market and we agree there is reason to be skeptical. Deregulation has delivered substantial benefits to the commercial and industrial market segment. The residential market however, faces a number of inherent disadvantages. Most residential customers will be in a position of less topic-specific knowledge, fewer resources, and little competitive leverage, making them more susceptible to entering into bad contracts with unfavorable commercial terms and to falling for misleading sales ploys. Furthermore, in most residential markets the opportunity for relatively meager bill savings is often outweighed by the higher risk of economic loss, lost time, and the overwhelming likelihood that the contract will continue indefinitely without oversight. With this in mind, we fundamentally believe that the Department’s best opportunity for exerting positive influence over this market is to require that suppliers demonstrate performance to the clients they serve. This could be achieved through a variety of means, including the inclusion of the monthly 'price to compare' rate on customer bills and/or mandated reporting of annual savings (loss) metrics back to the customer."