Strawman Proposed Rule From Texas PUC Staff Would Require Brokers To Inform Customers Of How Broker Will Be Compensated, Amount Of Compensation (By REP Or Customer)
Strawman Would Require Brokers To Provide To Customers The Names Of Any REPs For Which The Broker Has An Agreement To Recommend Such REP To Clients
Strawman Would Require That Agreement Allowing Broker To Act As Customer's Agent Must Be, "In Writing"
Strawman Would Prohibit Brokers From Stating Or Leading A Customer To Believe That Receiving Brokerage Services Will Provide A Customer With Better Quality Service From A REP
Strawman Would Limit Broker Registration Term To Three Years, Require Renewals
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Staff of the Public Utility Commission of Texas have filed a strawman proposed rule to regulate electricity brokers, including establishing and amending customer protection rules and establishing registration requirements (the current registration process is an interim process).
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Among other things, the strawman would create new 16 TAC § 25.486, Customer Protections for Brokerage Services, which would apply to all brokers, as well as to (where specifically stated) retail electric providers (REPs).
Under § 25.486, "agent" would be defined as, "a broker who has the legal right and authority to act on behalf of a
client regarding the selection of, or enrollment with, a REP for a product or service
offered by a REP, including electricity service."
Under § 25.486, "client" would be defined as, "a retail electric customer or applicant who receives or solicits
brokerage services from a broker."
The strawman § 25.486 would require that all brokers must inform clients of the following, among other things, prior to the initiation of brokerage services
• "How the broker will be compensated for providing brokerage services, who will
provide the compensation, and the amount or method of calculation of the
• "The names and commission certificate numbers for any REPs with which the broker
has an agreement to recommend that REP to clients"
• "Whether there is a financial penalty for terminating the brokerage services
agreement, and if there is, the amount of the penalty"
The strawman § 25.486 would provide that, "An agreement between a broker and a client that authorizes the broker to act as the client's agent must be in writing."
Among other things, a broker that enters
into an agreement with a client to act as the client's agent would be required to inform the client of
• A clear description of the actions the broker is authorized to take on the
• The duration of the agency relationship
• How the client's customer data and account access information will be
retained by the broker and disposed of at the conclusion of the agency relationship
The strawman § 25.486 would include a section governing "Customer Enrollments by Brokers" which would provide as follows:
(1) A REP is permitted to enter an agreement with a broker to complete enrollment of
a retail electric customer or applicant on behalf of the REP.
(2) A REP that authorizes a broker to complete retail electric customer or applicant
enrollments is responsible for compliance with applicable laws and commission
rules for all activities conducted on the REP's behalf by a broker.
(3) A broker that is authorized by a REP to complete online customer or applicant
enrollments must prominently display the EFL for any products offered without a
person having to enter any personal information other than zip code and
information that allows determination of the type of offer the consumer wishes to
review. Person-specific information must not be required. The EFL for each
product must be printable in no more than a two page format. The EFL, TOS, and
YRAC for any products offered for enrollment on the website must be available for
viewing or downloading.
The strawman § 25.486 would require that, "All written, electronic, and oral communications,
including advertising, websites, direct marketing materials, and billing statements produced by a
broker must be clear and not misleading, fraudulent, unfair, deceptive, or anti-competitive."
The strawman § 25.486 would provide that prohibited communications from brokers would include, but would not be limited to, among other things, "Stating, suggesting, implying or otherwise leading a client to believe that
receiving brokerage services will provide a customer with better quality
service from a REP or TDU."
The strawman § 25.486 would provide that all printed advertisements, electronic advertising over the Internet, and websites
must include the broker's registered name or commission authorized business name
and the broker's registration number.
More generally, the strawman would provide that, "A broker must comply with the commission's education, disclosure, and marketing
guidelines and rules. A broker may not release proprietary customer information to
any person unless the customer authorizes the release in a manner approved by the
The strawman would amend §25.5 (General Provisions - Definitions for the electric substantive rules) to define broker as, "A person that provides brokerage services."
The strawman would define "Brokerage Services" as, "providing advice or procurement services to, or acting on
behalf of, a retail electric customer regarding the selection of a retail electric
provider, or a product or service offered by a retail electric provider, including
brokerage services offered online. Enrolling a retail electric customer as an agent
for a retail electric provider is not a brokerage service."
The definition generally tracks that of S.B. No. 1497, with the addition of the explicit language that enrolling a retail electric customer as an agent
for a retail electric provider is not a brokerage service
The strawman would amend current §25.471, General Provisions of Customer Protection Rules, to provide that §25.471 applies to brokers
The strawman would update various provisions of §§ 25.472, 25.473,
25.474, 25.475, 25.482, 25.485, 25.491, and 25.492 to make them applicable to brokers, generally making any provision currently applicable to an aggregator also applicable to a broker
In one notable change, the strawman would provide that each broker, "must employ 24-hour
capability for accepting a customer's or client's rescission of the terms of service
by telephone, according to rights of cancellation in §25.474(j) of this title
(relating to Selection of Retail Electric Provider)."
The strawman would also add new 16 TAC § 25.112 governing broker registrations
Most notably, the strawman 16 TAC § 25.112 would provide that a broker registration expires three years after the date of
acceptance. Each registrant must renew its registration with the commission not less than
90 days prior to the expiration date of the current registration by submitting the required
form in the manner established by the commission. A registration that is not timely
renewed is no longer valid and the entity will be removed from the broker list on the
Brokers would be limited to operating under a
maximum of five assumed names. At the time of registration, the registering entity
must provide all names to the commission.
"Business names must not be deceptive,
misleading, inappropriate, confusing, or duplicative in whole or part of any name
currently in use or previously approved for use by a broker, aggregator, or REP in a
way that may be confusing or misleading," the strawman would provide
As part of the registration, the broker would be required to file, "Information on file with the offices of the county clerks in the counties where the
registering entity maintains a business premise and in all counties where the
registering entity conducts business under an assumed name."
In registering with the PUC, the broker would be required to provide, "The name, title, business mailing address, and telephone number of each of the
registering entity's directors, officers, or partners."
The strawman would provide that during the broker registration process, the registering entity must immediately inform the commission of any material
change in the information provided in the registration application while the
application is pending.
"A broker must amend its registration to reflect any changes to the information
previously submitted, including business name, address, or telephone number within
ten business days from the date of the change," the strawman would provide