Texas Broker Operating Online Shopping Site Seeks Clarity On Strawman Broker Regulations

ElectricityPlans, which operates an online retail energy shopping website, submitted comments to the Texas PUC seeking clarity on certain regulations related to the disclosure of compensation to brokers

EnergyChoiceMatters.com was first to report (story here) the strawman electric broker regulations filed by PUC Staff. Of note with respect to ElectricityPlans's comments are the requirement that brokers disclose to customers the amount and manner of compensation from a REP, and references in the strawman to a brokerage service agreement.

ElectricityPlans sought clarity on two provisions of the strawman as follows:

• "Section §25.486 (d)(4),(d)(7),(d)(8) refers to a brokerage service agreement. We would like clarification of what constitutes a brokerage service agreement. As a digital marketer that operates a comparison site for REPs, we provider brokerage services as defined by §25.5 (12), but do not enter into an agreement with our customers. §25.486 (d)(4) references the duration of the brokerage agreement; (d)(7) how to terminate said brokerage agreement, and (d)(8) financial penalty for terminating a brokerage agreement. This requirement seems more applicable to a situation where a broker acts as an agent or when a broker obtains a letter of exclusivity from a client. We are not acting as an agent as defined in §25.486 (b)(1)."

• "Section §25.486 (d) (5) states that brokers are required to disclose the amount or method of compensation for providing brokerage services. In our digital electricity marketing business model, the compensation amount is different for almost every plan offered on the site. The compensation is essentially payment to market plans for the REP. The proposed rule states the amount or method of compensation be disclosed. We believe that both the amount of compensation and the method of compensation are confidential. With the competitive retail energy market in Texas, if a customer finds a better rate somewhere else, they are free to make that choice. Without a formal brokerage services agreement in place, there is nothing binding our customers to use our service. Compensation disclosure is not required in other deregulated states. It is not industry standard."

A reminder that under Staff's original filing of the strawman, Staff requested that interested persons submit written comments on the strawman by September 30, 2019.

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