Texas PUC Adopts Changes To General Customer Protection Rules To Reflect Oversight Of Brokers

The Public Utility Commission of Texas adopted in Project 50406 final rule amendments to 16 Tex. Admin. Code (TAC) §25.471, relating to general provisions of customer protection rules in the retail electric market

The final amendments modify §25.471 to reflect new broker rules adopted in Project No. 49794, Rulemaking for Broker Registrations (see EnergyChoiceMatters.com's exclusive prior story here for details on the adopted broker rules).

The amendments modify §25.471 to provide that, only where specifically stated, Chapter 25, Subchapter R, (relating to Customer Protection Rules for Retail Electric Service) applies to brokers

Specifically, the amendments to §25.471, "prohibit fraudulent, unfair, misleading, deceptive, or anticompetitive acts and practices by aggregators, REPs, and brokers in the marketing, solicitation and sale of electric service; in the administration of any terms of service for electric service and in 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."

The revision adds the term "broker" to the current language, as well as the new additional language describing brokerage services by stating, "and in 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."

The latter language was added to address concerns from TEPA, who had argued that the rule otherwise suggested that brokers engage in the marketing or sale of "retail electric services", which would confuse customers since brokers do not engage in such activities (with statute defining 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")

In a preamble, the PUC states, "The commission notes that the changes made to 16 TAC §25.471 in this project do not uniformly apply the commission's customer protection rules to brokers 'in the same manner that the [c]ommission's general provisions of customer protection rules apply to aggregators,' as described by OPUC."

Rather, "The provisions of Subchapter R apply to brokers when specifically stated," the preamble states

In the recent broker rule, the PUC prohibited slamming by brokers

ARM had sought to include in the revised §25.471 a provision stating that the customer may not waive this anti-slamming provision in the broker rule. The current rule at §25.471 allows larger customers (above 50 kW) to waive certain customer protections in their agreements with REPs

The PUC rejected ARM's proposal to prohibit larger customers from waiving the broker rule anti-slamming provision

The preamble states, "Brokerage services are inherently discretionary. If a sophisticated large client opts to retain the services of a broker, the client is responsible for determining what services the broker will provide and the protections that the client expects to receive. Moreover, the client is not left without recourse, as suggested by ARM, as it is still free to pursue civil remedies if it believes the broker exceeded its authorizations under the contract."

"The large customers that are eligible to agree to a different level of customer protections under adopted 16 TAC §25.486(h) are sophisticated enough to identify [...] scenarios and determine if they are willing to agree to them. Moreover, some of these scenarios may be desirable for certain customers. For example, a large commercial client may wish to give a broker complete discretion over the company's electric service decisions. If the client wishes to reduce the broker's potential regulatory liabilities by waiving 16 TAC §25.486(h), the commission will not prevent it from doing so," the preamble states (Project No. 50406)

New Broker Registration Form Approved

Separately, the Texas PUC also adopted a new broker registration form, as proposed by Staff, reflecting the requirements of the recently adopted broker rules. The new form will be accessible on the PUC's website