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TEPA Concerned Proposed Texas Rule To Subject Brokers To Existing Consumer Protections Conflates "Retail Electric Services" With "Brokerage Services"

February 14, 2020

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Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The Energy Professionals Association has filed comments with the Texas PUC on a proposal for publication that would amend the existing general customer protection rules to reflect oversight of brokers, expressing concern that the proposed manner of implementing the addition of brokers to the rule does not recognize fundamental differences between "retail electric services" and "brokerage services" as defined in SB 1497.

As first reported by EnergyChoiceMatters.com, the proposed rule would add the term "broker" to existing 16 TAC § 25.471(b)(4), providing that the purpose of the rule is to, "prohibit fraudulent, unfair, misleading, deceptive, or anticompetitive acts and practices by aggregators, REPs, and brokers in the marketing, solicitation and sale of electric service and in the administration of any terms of service for electric service."

While TEPA does not object to a prohibition on such acts by brokers, TEPA expressed concern that by adding the term "broker" to the existing rule, the rule suggests that brokers are engaged in the marketing, solicitation and sale of electric service, as TEPA said brokers do not engage in such activities

"TEPA appreciates the Commission's interest in reconciling existing rules with those being considered for adoption in Project No. 49794 but is concerned the proposed approach will create confusion for marketplace participants and serve to misinform customers seeking competitive choice for electricity. To reduce this potential for confusion, TEPA believes the proposed new rule should more clearly recognize and distinguish between the services lawfully provided by brokers, and the retail electric services lawfully provided by REPs (and in a more limited manner, aggregators)," TEPA said

TEPA quoted various statutes which TEPA said, "underscore differences in the treatment of service offerings and authority of various market participants and lend clear statutory support to TEPA's view that brokers, retail electric providers, and aggregators provide services that are distinct and different under specific regulatory provisions in Chapter 39[.]"

Among other provisions, TEPA cited Sec. 39.3555 (a) which defines brokerage services as, "providing advice or procurement services to, or acting on behalf of, a retail electric customer regarding the selection of a retail electric provider, or a product or service offered by a retail electric provider"

TEPA further noted that, "Sec. 39.352 states clearly that a person may not provide retail electric service in this state unless certificated by the Commission as a retail electric provider (REP)[.]"

TEPA said that, "Because brokers do not 'market, solicit, or sell retail electric services' to the retail electric customers they represent, TEPA does not believe the proposed changes are an accurate reflection of broker transactions. The rule as drafted would serve to mislead to brokers, their customers, and other market participants. TEPA is also concerned that the proposed changes imply that brokers are offering services they are not authorized to provide and are legally prohibited from providing. This is extremely problematic."

Rather than add the term broker to subsection (b)(4) above, TEPA proposes a new subsection (b)(5) that would solely address brokers.

Under new subsection (b)(5), TEPA's suggested text would provide that the purpose of the rule is to, "prohibit fraudulent, unfair, misleading, deceptive, or anticompetitive acts and practices by brokers when providing advice or procurement services to, or acting on behalf of, a retail electric customer regarding the selection of a retail electric provider, or a product or service offered by a retail electric provider."

"TEPA believes it is critically important that Commission rules appropriately distinguish between retail electric services and brokerage services. Brokers represent the retail electric customer seeking the benefits of customer choice, and do not market, solicit or sell retail electric service for retail electric providers," TEPA said

"The proposed rule creates additional potential for confusion because REP Agents, who currently remain undefined in PUCT rules, actually provide services described and attributed to brokers in the proposed changes to Sec. 25.471 (b)(4). As previously recommended in comments provided in Project No. 49794, TEPA encourages the Commission to consider adding a separate, stand-alone definition of a REP Agent in Sec.25.471(d) rather than including REP Agents by reference in the REP definition in Sec. 25.471 (d)(10)," TEPA said

Project 50406

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