Maryland OPC Asks PSC to Address Issues Concerning "Commissioned and Technically Uninformed Intermediaries" in Retail Market

The Maryland Office of People's Counsel has asked the Maryland PSC to address several questions, including pending issues regarding whether non-employee agents of licensed suppliers or brokers require their own license (in Case 9245), prior to addressing the electric broker application of Vivint, Inc., and presumably and similarly situated brokers.

Vivint's Maryland application was first reported by Matters

OPC said that while Vivint appears to be well capitalized, none of Vivint's management, based on the application submission, appear to have any expertise in the business of supplying electricity.

Vivint said that does not intend to do anything but refer either its own customers or new prospects who express interest in contracting for retail electric power to another supplier who is (or suppliers who are) licensed in Maryland. As Vivint states in its application:

"Vivint, Inc. intends to market certain electric energy products and services for an electricity supplier company. Marketing will be done via telephone to existing customers of Vivint or to new prospects. Vivint would promote the Products only to customers who have purchased Vivint's products and services. When a Prospect shows any interest in the Products, Vivint's telephone representative would transfer the call to the electricity supplier representative on another telephone line and make all appropriate introductions. Thereafter, Vivint would have no further involvement with the Prospect for the Products. If and when the Prospect enters into a customer agreement or other contractual arrangement with the electricity supplier for the purchase of the Products and collects the first full payment thereunder, Vivint would earn a commission to be paid by the electricity supplier. At no time would Vivint take title to any of the Products."

Pursuant to Md. Ann Code, Public Utilities Article §7-507(b)(3)(i), a person other than an electric company providing standard offer service must provide to the Commission, "proof of technical and managerial competence."

"The question posed by Vivint's application is whether a company without any technical experience in the business of selling retail electric power to residential customers may nonetheless be lawfully licensed if its business model is to act solely as a referral to another licensed supplier (who presumably has demonstrated the requisite technical capability) for commissions paid on any customer who signs up with the supplier with whom Vivint has a contractual relationship," OPC said.

"On one hand, Vivint has certainly taken the right approach, both by first applying to be a licensed supplier in Maryland before it accepts any commissions and also by expressly disclosing its proposed business model in its Application. On the other hand, the questions of whether the law allows for -- or should be construed to allow for -- pure commissioned and technically uninformed intermediaries in the sale of electric power to residential customers is both more complex and potentially troubling," OPC continued.

"For example, since many of the anticipated referrals will be from Vivint's customer base, it is foreseeable that residential customers will at least pose and want answered from Vivint some initial questions about switching from SOS to contractual electric power supply before being transferred out of Vivint's own telephone call-in center. As another example, upon the Commission receiving a complaint from a customer, it may prove difficult to separate what the customer may have been told by Vivint and what the customer may have been told by the ultimate electric supplier," OPC said.

Noting that similar issues regarding what entities in the market should be licensed are being addressed in Case 9245, OPC believes that it would be prudent for the PSC to, "consider the issues and questions raised herein, and the still as-yet unresolved proceedings in Case No. 9245, before the Commission makes its determination on whether to grant Vivint's Application for a license to supply electricity or electric generation services in Maryland."