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Retail Provider Groups Seek Texas Rule Provision Prohibiting Duplicative, Deceptive Broker Names

ARM Seeks Prohibition On Brokers Telling Customers They Would Receive "Better Quality Service" From A REP For Using Brokerage Services

January 7, 2020

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Copyright 2010-19
Reporting by Paul Ring •

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In comments to the Texas PUC on a proposal for publication on rules for the regulation of electric brokers, the Alliance for Retail Markets sought a rule which would prohibit the use of duplicative (of existing market participants, such as REPs) or deceptive names by brokers

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

ARM noted that under the proposal for publication, "Subsection (c)(1) limits a broker to five business names, but does not include the additional requirements previously included in the Strawman that such names not be 'misleading, inappropriate, confusing. or duplicative in whole or in 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.' Similar naming requirements apply to REPs under 16 TAC § 25.107(e)(1)(B). Numerous sections of PURA entitle buyers of retail electric service freedom from misleading and deceptive conduct. The Commission's rule governing the registration of aggregators requires that aggregators comply with customer protection requirements and makes misleading, deceptive, etc. conduct a significant violation of aggregator registration. Appropriately, the Commission has proposed that the same requirements apply to brokers in 16 TAC § 25.486(g). In order to prevent customer confusion and to avoid any unfair advantage that a broker may gain or harm that it could cause by mimicking another Commission-regulated market participant's name, ARM supports the re-inclusion of such naming prohibitions in § 25.112(c)(1)."

ARM noted that, "there are two affiliates of regulated transmission and distribution utilities ("TDU") that have sought broker registrations with the Commission."

The first is long-time intermediary Centerpoint Energy Intelligent Energy Solutions, LLC, operator of the True Cost website, and the second, which as exclusively first reported by is newly expanded to brokering, is AEP Energy

"One of these brokers shares the same branding as its TDU affiliate, making it difficult for a retail electric customer to understand that the broker is not the same entity as the TDU, and which also raises questions as to whether an unfair competitive advantage is being bestowed upon that broker by its regulated affiliate," ARM said

ARM also said that, "As required for disclosure to a customer in 16 TAC § 25.486(f)(3), brokers should be required to inform the Commission in their registration of any REP with which they are affiliated. In the spirit of transparency, ARM also suggests that brokers be required to disclose affiliate relationships to other customer-facing competitive market entities as well. The following proposed provision tracks the wording of the disclosure requirement in § 25.486(f)(3)."

ARM also objected to the exclusion from the proposal for publication of a strawman proposal that would have prohibited brokers from telling customers that customers would receive "better quality service" from a REP for using brokerage services

ARM stated, "In the PFP's section addressing broker communications, the prohibition on stating or implying that a customer receiving brokerage services will obtain 'better quality service' was replaced with 'more reliable service.' ARM believes that the original 'better quality service' wording more fully captures the intent of the restriction and is consistent with existing Commission rules; 'reliability' has a distinct and narrower meaning within the electric power industry and restricting the prohibition on misleading broker communications to this subset would permit inaccurate representations to customers. Furthermore, use of 'better quality service' is consistent with the disclosure requirement for aggregators and REPs established in 16 TAC § 25.475(c)(1)(A)(iii). ARM further recommends that the Strawman language extending the 'better quality service' communication prohibition to REP service be reinstated in the adopted rule. REPs provide the same quality of service to all similarly situated customers and to imply that by obtaining brokerage services this would be otherwise for a customer is false. Brokers are certainly free to represent an ability to assist and advocate for a customer in their interactions with REPs, but allowing brokers to make unfounded claims regarding a REP's customer service would allow them to denigrate the REPs' brand unfairly."

In separately filed comments, the Texas Energy Association for Marketers offered similar recommendations concerning broker names

"[T]he rule should include a restriction against any broker co-branding with a transmission and distribution utility, including affiliates of a transmission and distribution utility," TEAM said

TEAM recommended language stating, "Business names may not be duplicative in whole or in part of the brand or business name of a transmission and distribution utility."

"The rule should also include restrictions against broker branding that is deceptive, misleading, or duplicative of that of an existing REP, broker, or aggregator where there is no affiliation between the broker and the other competitive energy service provider," TEAM said

TEAM recommended language stating, "Business names may not be deceptive, misleading, vague, or duplicative of a name previously approved for use by another broker, an aggregator or REP that is not affiliated with the registrant."

TEAM also said that the rule should restrict against broker branding and web addresses that are deceptive, misleading, or duplicative of the website

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