Texas PUC Staff Draft Proposal For Publication For Broker Regulation Omits Requirement For Brokers To Inform Customers Of Amount Of Compensation From REP

Draft Proposal For Publication Omits Prohibition On Brokers Stating That Receiving Brokerage Services Will Provide A Customer With Better Quality Service From A REP

Draft Proposal For Publication Does Not Use Term "In Writing" For Required Agreement For Broker To Act As Customer's Agent

Draft Omits Requirement That Brokers Provide To Customers The Names Of Any REPs For Which The Broker Has An Agreement To Recommend Such REP To Clients

Draft Proposal For Publication Retains Proposal Limiting Broker Registration Term To Three Years, Requires Renewals

November 8, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Staff of the Public Utility Commission of Texas have filed a draft proposal for publication governing the registration and regulation of electric brokers, and the draft omits a provision contained in an earlier strawman proposal that would have required brokers to disclose to customers the amount of compensation received by the broker

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As exclusively first reported by EnergyChoiceMatters.com, the strawman rule would have required brokers to disclose to customers, "How the broker will be compensated for providing brokerage services, who will provide the compensation, and the amount or method of calculation of the compensation."

The Staff draft proposal for publication does not contain language stating that the broker must disclose to customers the amount of compensation, or calculation of compensation, from a retail electric provider

Instead, the Staff draft proposal for publication would provide that a broker must inform a client of the following before initiating service: "A description of how the broker will be compensated for providing brokerage services and by whom. If the broker is compensated directly by the client, the broker must disclose the details of the compensation."

The Staff draft proposal for publication would also omit a strawman proposal that brokers must disclose to customers, "The names and commission certificate numbers for any REPs with which the broker has an agreement to recommend that REP to clients."

The Staff draft proposal for publication would define "client" as, "A person who receives or solicits brokerage services from a broker."

The Staff draft proposal for publication would define "client agent" as, "A broker who has the legal right and authority to act on behalf of a client regarding the selection of, enrollment for, or contract execution of a product or service offered by a retail electric provider (REP), including electric service."

An agreement between a broker and a client that authorizes the broker to act as a "client agent" for the client must be, "memorialized on paper or electronically," the Staff draft proposal for publication states. The strawman had earlier used language that would have required such agreements to be, "in writing."

Concerning communications which brokers would be prohibited from making to customers, the Staff draft proposal for publication would omit the strawman's proposal that would have prohibited brokers from, "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..."

Under the Staff draft proposal for publication, prohibited communications include:

(A) Stating, suggesting, implying or otherwise leading a client to believe that receiving brokerage services will provide a customer with more reliable service from a transmission and distribution utility (TDU);

(B) Falsely suggesting, implying or otherwise leading a client to believe that a person is a representative of a TDU, REP, aggregator, or another broker;

(C) Falsely stating or suggesting that brokerage services are being provided without compensation, and

(D) Falsely claiming to be the client agent of a customer.

The Staff draft proposal for publication would generally provide 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 Staff draft proposal for publication would define "broker" as, "A person that provides brokerage services."

The Staff draft proposal for publication 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 REP, or a product or service offered by a REP."

Under the Staff draft proposal for publication, "A person must not provide brokerage services, including brokerage services offered online, in this state for compensation or other consideration unless the person is registered with the commission as a broker. A retail electric provider (REP) is not permitted to register as a broker and must not knowingly provide bids or offers to a person who provides brokerage services in this state for compensation or other consideration and is not registered as a broker. A REP may rely on the publicly available list of registered brokers posted on the commission's website to determine whether a broker is registered with the commission."

Concerning the enrollment of customers, Staff draft proposal for publication would provide that, "A broker that is not an agent of a REP under 25.471(d)(10) of this title (relating to General Provisions of Customer Protection Rules) may enter into an agreement with a REP to assume all or part of the REP' s responsibilities under §25.474 of this title (relating to Selection of Retail Electric Provider) for the purpose of enrolling applicants or customers for retail electric service. A broker that assumes the responsibilities of a REP under §25.474 must comply with the requirements of §25.474. A REP that enters into an agreement with a broker to assume all or part of the REP's responsibilities under §25.474 remains accountable under §25.107(a)(3) of this title (relating to Certification of Retail Electric Providers) for compliance with all applicable laws and commission rules for all activities conducted by the broker related to those responsibilities. An agreement between a REP and a broker under this subsection must be memorialized on paper or electronically and provided to the commission upon request."

The Staff draft proposal for publication would provide that, "Each broker must ensure that clients have reasonable access to its service representatives to make inquiries and complaints, discuss charges on bills, terminate service, and transact any other pertinent business."

The Staff draft proposal for publication would omit language from the strawman that would have required that brokers, "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 Staff draft proposal for publication would provide that all records required by the broker registration and regulation rule must be retained by a broker for no less than two years, unless otherwise specified.

The Staff draft proposal for publication would retain the strawman's provision that a broker registration expires three years after the date of the assignment of a broker registration number

The Staff draft proposal for publication would provide that each registrant must submit the information required to renew its registration with the commission not less than 90 days prior to the expiration date of the current registration. An expired registration is no longer valid and the broker will be removed from the broker list on the commission's website.

Staff said that, if the adopted rule requires renewal of registrations, Commission Staff plans to create an on-line renewal tool.

The Staff draft proposal for publication would omit the strawman's proposed requirement that, as part of the registration process, "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 Staff draft proposal for publication would omit the strawman's proposed requirement that, as part of the registration process, 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."

Project 49794

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