Energy Ogre Recommends Texas PUC Require PUC Approval Of Client-Agent Forms Used By Brokers, Or Require Use Of Standard Forms
Says PUC-Approved Form Necessitated By REPs Which Refuse To Recognize Its Agent Authority
Also Says Disclosure Of Compensation "Vital" Information
Power Wizard Warns Of REP Abuse Of Provision Allowing REPs Request Verification Of Broker's Agency Relationship With Customer
TEAM Says REPs Should Only Be Required To Accept Broker Agency To Execute Enrollment On Behalf Of Customer Upon Showing Of Statutorily Recognized Durable Power Of Attorney
January 7, 2020 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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In comments to the Texas PUC on a proposal for publication concerning electric broker regulation, Energy Ogre recommended that, concerning the requirements for a broker to act as the agent for a client, the broker use an authorization form approved by the PUC, or, in the alternative, a standard form
In its comments to the PUC, Energy Ogre addressed §25.486(g), Client Agent Requirements, and specifically to the provision that requires 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.
In its comments to the PUC, Energy Ogre stated, "Since there are approximately one
thousand registrations by brokers with the Commission, it stands to reason that the written client agent
requirements should be on a form approved by the Commission. Having over one thousand different
forms, unregulated, would lead to confusion both for the retail electric customer as well as between the
broker and the retail electric provider. Just as the Commission compiled its own approved form for broker
registration as evidenced by §25.112 (d)(2) to create consistency, it seems prudent to follow the same
logic in this instance with the client agent agreement form. Each broker can create its own version of the
Client Agent agreement in order to allow for individuality and creativeness but such form would be
submitted to and approved by the Commission and thereafter that particular form could contain the
words, 'this form approved by the PUC.'"
In its comments to the PUC, Energy Ogre stated, "A secondary alternative would be for the Commission to provide a single client
agent agreement to be used by all brokers. This would provide a scenario where the client agent
agreement is acceptable to all and accepted by all. Standardized forms are used in so many instances to
eliminate confusion, duplicity and to streamline agency processes. Either of these options seem to
achieve the goals of customer protection, agency efficiency and consistency throughout the process."
In its comments to the PUC, Energy Ogre stated, "The
need for a Commission approved form, that is accepted across all sectors in the industry, is not a
theoretical concern. Energy Ogre has been in the industry for five years and has, on multiple occasions,
been frustrated in its efforts to perform the services a residential customer wishes it to perform on the
customer's behalf because of actions by retail electric providers who refuse to recognize the agent authority of Energy Ogre. While these actions have not prohibited Energy Ogre's ultimate success, it has
made the process unnecessarily cumbersome for the residential customer. There have been instances of
enrollment delays, blocking the IP address of Energy Ogre and massive inconveniences to the customer
to prevent them from using Energy Ogre. Energy Ogre is always upfront with the terms of agent
authorization with its customers and customers knowingly and willingly enter into an agreement with
Energy Ogre because they recognize the valued service that Energy Ogre provides in a complicated and
oftentimes confusing marketplace. Additionally, as the market evolves and becomes more complicated,
i.e. time of use rates, it will be increasingly important for a broker like Energy Ogre to have the authority
to act on behalf of its residential customer. Energy Ogre does not perform any actions that an individual
residential customer could not do on its own. Therefore, the only reason these questionable actions are
being taken by the REPS [sic] is because the customer is represented by Energy Ogre. In short, there is an
evident need for a Client Agent authorization form to be approved by the Commission so that the
agreement and agency authority, to step into the shoes of the residential customer, is recognized and
accepted by all in the industry."
In its comments to the PUC, Energy Ogre also addressed required compensation disclosures by brokers.
As previously reported by EnergyChoiceMatters.com, the proposal for publication would only require that the broker provide customers with, "A description of how the broker will be compensated for providing brokerage services and by whom." Only if the broker is compensated directly by the client, would the broker be required to disclose the "details" of the compensation. In contrast, an earlier strawman has proposed that the "amount" of compensation received by the broker be required to be disclosed.
In its comments to the PUC, Energy Ogre stated concerning a compensation disclosure, "Of particular note is the disclosure of compensation received by
a broker. We believe this to be an incredibly reasonable requirement. It is possible that a distinction could
be made on the need for disclosure of compensation in a commercial setting versus a residential setting.
The compensation a broker receives, and from whom, is vital information to a residential customer and is
completely consistent with other realms of disclosures required within the industry."
In separately filed comments, Power Wizard, LLC objected to a proposed requirement that a broker that is authorized to act as a client agent for the client must provide evidence of that authority upon request or a REP with which the broker seeks to enroll the client. The proposal would also require production of such evidence when requested by the client or commission staff; Power Wizard does not object to such production upon request of the latter two entities
Power Wizard said that delegating verification of agent authority to REPs, "opens the door to a variety of
problems, including potential anti-competitive abuses and discrimination by REPs against
customers who use concierge services and other shopping tools to make better shopping decisions."
"Customers who use shopping tools are more likely to find and enroll in plans that yield low or
negative margins for REPs, and they are significantly more likely to shop at the end of their
contract term than the average customer. Power Wizard believes that REPs seeking to defend
against the growth and adoption of shopping services that benefit consumers, but disrupt the
traditional REP business model, may use the obligation for client agent brokers to provide evidence
of agent authority as a tool to delay or obstruct the enrollments of customers who use shopping
tools and concierge services. Therefore, Power Wizard respectfully suggests the PFP be revised
and the obligation for client agent brokers to provide verification of agent authority to REPs be
eliminated," Power Wizard said
"Power Wizard opposes any requirement for client agents to provide evidence of
agency authority to REPs because such a requirement creates the potential for anti-competitive
behavior and discrimination against retail electric customers based on the customer's use of client
agents or advanced shopping tools that rely on client agent authority. As stated earlier, retail
electric customers who use advance shopping tools are more likely to identify and enroll in low
cost plans that have low or negative margins for REPs, and these customers are also significantly
more likely to switch REPs at the end of their contract term. More informed shopping decisions
and higher switching rates are disruptive to traditional REP business models. Therefore, Power
Wizard is concerned that the obligation to provide REPs with evidence of client agent authority in
proposed 16 TAC § 25.486(g)(3) is both unnecessary and could be misused to justify delaying or
blocking enrollments by client agents," Power Wizard said
In contrast, the Texas Energy Association for Marketers said in separately filed comments that, "Unless a broker provides a statutorily recognized durable power of
attorney, a REP is not obligated to accept a third-party's representation or evidence
that it has legal authority to execute enrollment for the customer."
TEAM further suggested rule language providing that, "A broker that acts
as a client agent for the client shall indemnify any REP with which the broker
enrolls the client against all complaints, actions, and harm resulting from any and
all claims that the enrollment was not authorized or verified or that the broker did
not have authority to act as the client's agent."