Texas PUC Recommends To Lawmakers That Brokers Be Required To Be Licensed By PUC

Update, 12/20: The PUC approved the scope report without modification to the broker recommendation discussed below.

Earlier:

In draft legislative recommendations in a draft scope of competition report, Staff of the Texas PUC have recommended including a recommendation stating that, "The Commission recommends that the Legislature require retail electric brokers to register with the Commission in a manner similar to retail electric aggregators to ensure that customers who use a retail electric broker have adequate consumer protections."

In the draft, Staff states, "The Commission currently has the authority to certify retail electric providers and register electric aggregators. However, there are additional businesses that help customers navigate the marketplace to find a retail electric plan. Retail electric brokers connect buyers with sellers of electricity. While not necessary for every customer, some customers use brokers and are willing to pay for this service. Many non-residential electric customers use brokers as an alternative to developing in-house expertise to negotiate a retail electric contract. These can be commercial and industrial business owners, but also includes churches, schools, and other community organizations."

In the draft, Staff states, "Some non-residential customers have the desire and the ability to enter into more sophisticated contracts for retail power. This increase in complexity allows non-residential customers to achieve lower rates, but can also expose them to more financial risk. For residential customers, retail electric brokers often use the 'concierge' business model, in which the customer authorizes the retail electric broker to make electricity contract decisions on his behalf. This requires the concierge broker to maintain customer-specific information related to the customer's energy usage and payment information. For all types of service, the customer depends on the retail electric broker's energy expertise. When a retail electric broker offers bad advice, it is the final customer who ultimately pays the price."

In the draft, Staff states, "The Commission regulates many participants in the retail electric market and has a suite of customer protection rules, including requirements that those participants demonstrate industry expertise and financial stability. Electric aggegators perform many of the same functions as retail electric brokers and are required to register with the Commission under section 39.353 of the Texas Utilities Code. The Commission does not regulate retail electric brokers, and there are currently no customer protection or business requirements specifically for individuals or companies acting as brokers. There is no recourse for customers beyond civil litigation and fraud statutes."