Pennsylvania Requires Licensing of All Intermediaries Involved in Natural Gas Procurement (Brokers & Consultants), Carves Out Limited "Marketing" Exemptions

The Pennsylvania PUC has adopted final rules expanding the entities required to obtain a natural gas supplier license from the PUC, including brokers and consultants, with a limited carve-out for non-traditional marketers.

The final rule adopts the following definitions:

Aggregator: an entity, licensed by the Commission, that purchases natural gas and takes title to it as an intermediary for sale to retail customers.

Broker: an entity, licensed by the Commission, that acts as an agent or intermediary in the sale and purchase of natural gas but does not take title to natural gas supply.

Nonselling Marketer: an individual or commercial entity, such as a telemarketing firm, door-to-door salesman or company, or auction-type website, under contract to a licensed NGS [natural gas supplier], that provides marketing services to retail customers for natural gas supply services. A nonselling marketer under contract to more than one licensed NGS shall be required to obtain a license.

Nontraditional Marketer: a community-based organization, civic, fraternal or business association, or common interest group that works with a licensed NGS as an agent to market natural gas service to its members or constituents. A nontraditional marketer is not required to obtain a license from the PUC. A nontraditional marketer:

I. May not require its members or constituents to obtain its natural gas service through a specific licensed NGS.

II. May not be compensated by the licensed NGS if members or constituents enroll with the licensed NGS.

The final rule provides that a natural gas supplier, "including an aggregator or a broker," may not engage in marketing, or may not offer to provide, or provide natural gas supply services to retail customers until it is granted a license by the Commission.

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The PUC clarified that an "energy consultant," including one working on behalf of the customer and not a supplier, falls within the definition of broker, and therefore must be licensed.

"While we acknowledge the latitude that is available to the Commission to separately delineate a definition of 'energy consultant,' entities that provide energy consultation services for consumers under our final form regulations will already be required to obtain a license from the Commission because their activities fall within the definition of 'broker,'" the PUC said

"Implicit in our definition of the term "broker" is the understanding that an entity acting as an agent or intermediary in the sale and purchase of natural gas, whether working on behalf of the retail consumer or the NGS, must be licensed," the PUC said.

A nontraditional marketer is not required to obtain a license from the PUC.

A nonselling marketer under contract to more than one licensed NGS shall be required to obtain a license

The PUC clarified that a nonselling marketer is only exempt from licensing where it is under contract to a single natural gas supplier. A nonselling marketer contracted to a single NGS in each service area, but which has contracts with multiple natural gas suppliers throughout the state, does not qualify for the licensing exemption.

The PUC noted that many natural gas utility service areas overlap, and said that expanding the licensing exemption to allow the nonselling marketer to represent different single suppliers in each service area removes the, "direct relationship or responsibility [back to the NGS that] may be inferred in the event of abuse. "

"[T]he Commission believes that consumer protections are further enhanced by requiring 'nonselling marketers' working for more than one NGS to be licensed, even when the NGSs operate in separate service territories."

The PUC specified that based upon the activities that nonselling marketers perform, it will not establish a bonding requirement for nonselling marketers required to be licensed, "as they do not provide natural gas supply service as defined in section 2202 of the Act."