The Lone Star State’s energy brokers may have to answer to the Texas Public Utility Commission (PUC).
Sen. Judith Zaffirini submitted SB 1497 to the Senate Business and Commerce committee, who voted in favor of the bill 8-0 on Mar. 27, according to the state legislature’s records. The bill will now move to another phase of voting.
Proposed Bill Calls For Broker Accountability
According to a copy of the bill we viewed at the time of publishing, Zaffrini’s bill calls for the following six regulations and provisions:
- All brokers conducting business in the state must register with the PUC
- Retail electric providers aren’t allowed to knowingly give bids to an unregistered broker
- The registered broker has to comply with “consumer protection provisions, disclosure requirements and marketing guidelines”
- The PUC is responsible to create the rules to put the bill into action
- The PUC must process applications in 60 days or less from the day the broker submits their application
The bill lays out basic principles for the broker registration process but does not detail nuances like the cost of applying, how long the application is good for and which types of punishments the PUC would administer should brokers or energy companies violate the regulations the PUC sets forth in the event the bill passes.
According to the bill, it would take effect on Sept. 1 of this year.
“We Are Supportive of the Bill”: TEPA
Huston Able, president of the national board of The Energy Professionals Association (TEPA) and executive vice president of Houston-based Choice Energy Services, told Energy Pages that TEPA supports the bill.
“We are supportive of the bill in regards to brokers being registered in the state of Texas, which provides an identifier for said brokers’ shops that are operating in our state,” Able told us in a phone interview
As far as the consumer is concerned, Able said a bill like this protects them from disreputable brokers who appear one day and vanish the next.
“This creates a more sound marketplace for the customer, whereas at the end of the day, the customer is getting the best products and services from reputable brokers that have been operating correctly,” he said
Regulations Will “Protect Customers”
Jim Mathers, president of Florida-based Energy Professionals, has more than 20 years of experience in deregulated energy markets including Texas.
He said in a statement to Energy Pages that proper energy-broker regulations protect Texas’ ratepayers.
“I think broker regulation will protect customers from entities that take advantage of customers through ignorance or neglect. Also, I believe this will protect brokers who are delivering an honest service from entities who disregard common contract law,”Mathers said.
Creating the right set of regulations, however, is the trick. The states who do it right, he said, are those that make sure brokers are solvent, understand deregulation rules, educate customers about price comparisons and what goes into pricing, as well as understand contract law.
At this point, the proposed bill contains a lot of unknowns and gives a lot of leeway to the PUC to adopt all the necessary rules to implement the regulations. Mathers said a possible mistake is that the PUC could treat brokers nearly the same way as energy suppliers.
“Some states…add complexity to broker license applications that brokers have no knowledge or responsibility over, such as wholesale energy purchasing, and billing requirements,” Mathers said. “Brokers should facilitate transactions between the customer and the supplier, and should be making the customer aware of the pros and cons of each of the suppliers that they represent to the customer.”
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