Texas Broker Operating Online Shopping Site Seeks Clarity On Strawman Broker Regulations
Notes Customers Using Site To Shop Don't Sign An Agreement For Brokerage Services
Says Compensation To Broker Should Be Confidential
September 25, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
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ElectricityPlans, which operates an online retail energy shopping website, submitted comments to the Texas PUC seeking clarity on certain regulations related to the disclosure of compensation to brokers
EnergyChoiceMatters.com was first to report (story here) the strawman electric broker regulations filed by PUC Staff. Of note with respect to ElectricityPlans's comments are the requirement that brokers disclose to customers the amount and manner of compensation from a REP, and references in the strawman to a brokerage service agreement.
ElectricityPlans sought clarity on two provisions of the strawman as follows:
• "Section §25.486 (d)(4),(d)(7),(d)(8) refers to a brokerage service agreement. We would like
clarification of what constitutes a brokerage service agreement. As a digital marketer that
operates a comparison site for REPs, we provider brokerage services as defined by §25.5 (12),
but do not enter into an agreement with our customers. §25.486 (d)(4) references the duration
of the brokerage agreement; (d)(7) how to terminate said brokerage agreement, and (d)(8)
financial penalty for terminating a brokerage agreement. This requirement seems more
applicable to a situation where a broker acts as an agent or when a broker obtains a letter of
exclusivity from a client. We are not acting as an agent as defined in §25.486 (b)(1)."
• "Section §25.486 (d) (5) states that brokers are required to disclose the amount or method of
compensation for providing brokerage services. In our digital electricity marketing business
model, the compensation amount is different for almost every plan offered on the site. The
compensation is essentially payment to market plans for the REP. The proposed rule states the
amount or method of compensation be disclosed. We believe that both the amount of
compensation and the method of compensation are confidential. With the competitive retail
energy market in Texas, if a customer finds a better rate somewhere else, they are free to make
that choice. Without a formal brokerage services agreement in place, there is nothing binding
our customers to use our service. Compensation disclosure is not required in other deregulated
states. It is not industry standard."
A reminder that under Staff's original filing of the strawman, Staff requested that interested persons submit written comments on the strawman by September 30, 2019.