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Updated: Texas PUC Commissioner Proposes, For Comment, Provision That Brokers Be Required To Disclose To Client Any Affiliation With Retail Electric Provider

PUC Chair Concerned With Language Concerning Broker Compensation Disclosure Requirement

November 14, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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Update, 11/14, 1:45 pm

The PUC today approved issuing the electric broker regulation proposal for publication for public comment, as filed by Staff with the addition of the proposed provision from Commissioner Shelly Botkin that electric brokers be required to disclose to clients any affiliation with a retail electric provider, as further described in our original story below

See's prior story for details on the proposal for publication as filed by Staff


In a memo in advance of today's Public Utility Commission of Texas open meeting, Commissioner Shelly Botkin has proposed that the proposal for publication include a provision that electric brokers be required to disclose to clients any affiliation with a retail electric provider

See's prior story for details on the proposal for publication that is before the Commission today

Botkin wrote, 'I propose that the Commission add ... a requirement that a broker must disclose any retail electric provider that is an affiliate of the broker.'

'To be clear, I have not decided whether I believe the final rule should require such a disclosure. This addition would be in order to solicit public comment on this point,' Botkin wrote

Chairman DeAnn Walker, while supporting publication of the Staff draft for purposes of receiving public comment, highlighted several areas of concern, and on which she would like stakeholder comment for consideration of potential changes prior to final adoption of a rule

In particular, Walker questioned what type of disclosures concerning compensation received by the broker should be required

As exclusively first reported by, a draft strawman rule would have required brokers to disclose to customers the amount of compensation (or specific calculation) received from the REP. The draft proposal for publication pares back this requirement, and would not require, in situations where the broker is compensated by the REP, the specific amount of compensation to be disclosed, but would still require a description of 'how' the broker would be compensated

Walker wrote concerning the compensation issue, '[Proposed] 16 TAC §25.112(f)(5) requires the broker to provide the following information: '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.' At this point, I do not believe that the broker needs to provide this level of detail on compensation in a competitive market. In my discussions with the Commission Staff, the concern was raised about transparency on compensation to brokers from the customer. I fully agree that brokers must be transparent in charges that will be paid by the customer. However, if the broker is being compensated by an entity other than the customer, I do not believe such information needs to be disclosed. Therefore, ultimately, I am likely to consider deleting the first sentence and maintaining the second sentence in this subsection. However, I would like further input on the balance of providing the customers with sufficient information on compensation to be paid by the customer and the privacy of the broker's compensation from other sources.'

Walker also addressed the previously reported proposed requirement that brokers would need to renew their registration every three years

'16 TAC §25.112(e) requires the renewal of broker registrations every three years. Many of the comments on the Staff Strawman Rule raised concerns with this requirement. Those comments stated that no other registration at the Commission requires a renewal. I discussed the issue with the Commission Staff, and I believe they have a legitimate purpose in including a renewal process. The Commission Staff raised the concern that brokers will go out of business, and there is no way for the Commission to know to remove those brokers from the existing list of brokers. Over time the list of brokers will become long and cumbersome without removing the brokers that are no longer in business. I also discussed with the Commission Staff that the renewal process should be simple, and notice should be provided to the registered brokers prior to the expiration of the three years. I would like further input on the renewal process and the need to maintain an accurate list of brokers,' Walker wrote

Walker also said that the rule should not specifically delineate information which brokers may deem confidential in their registration application, as existing PUC rules govern such protection. Walker wrote, '16 TAC §25.112(d)(2) allows for the applicant to identify information in the application as confidential. Subsection (c) of the proposed rule sets forth seven specific sets of information that must be filed in an application. In my opinion, the information required in subsection (c) should not be considered confidential. Therefore, I am not inclined to include provisions to file such information as confidential. If the applicant believes that any of the information is confidential, then there are other provisions in the Commission's rules that allow for filing such information. Thus, I do not believe subsection (c) is necessary. However, I would like further input from commenters on the type of information in the seven requirements that could be considered confidential.'

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