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

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

See background on a proposal for publication concerning electric broker regulation here

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

As exclusively first reported by EnergyChoiceMatters.com in May of 2019, Power Wizard is part of the Nextera Energy family of companies

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."

Project 49794

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