BILL ANALYSIS

 

 

Senate Research Center

S.B. 1497

 

By: Zaffirini

 

Business & Commerce

 

6/3/2019

 

Enrolled

 

 

 

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

 

As the competitive retail electric market has matured since opening in 2002, new entities are taking part in the market, providing brokerage services to retail customers. While these entities contract with customers to gain access to customer data, such as payment information and usage data, they are not required to register with the Public Utility Commission (PUC). The PUC has the authority to certify retail electric providers and to register aggregators, who bundle customers to negotiate for better rates from retail electric providers and have access to similar customer data as brokers.

 

The emergence of brokers is a reflection of the maturation and growth of the electric market, and, as a whole, good brokers play a vital role in the health of the market. There remain, however, the rare bad actors who can harm customers and ultimately serve to undermine customer confidence in shopping for electricity. If an unregistered broker violates the PUC's customer protection rules, there is no recourse for the harmed party. Examples of dubious market practices include misleading consumers, misrepresenting pricing, operating websites deceptively similar to reputable websites, ignoring customer protection rules, and providing no fee transparency.

 

As a result, the PUC recommended in its 2019 Scope of Competition Report to the Texas legislature that the legislature require entities providing brokerage services to register with the PUC in a manner similar to retail electric aggregators, to ensure adequate customer protections for customers using a broker.

 

S.B. 1497 seeks to apply the same registration and customer protection requirements currently applied to aggregators and create the exact same registration standard to those providing brokerage services. This would allow the PUC to address complaints lodged against these entities in the competitive market and to seek relief or corrective measures. (Original Author's/Sponsor's Statement of Intent)

 

S.B. 1497 amends current law relating to the registration and regulation of brokers by the Public Utility Commission of Texas.

 

RULEMAKING AUTHORITY

 

Rulemaking authority is expressly granted to the Public Utility Commission of Texas in SECTION 1 (Section 39.3555, Utilities Code) of this bill.

 

SECTION BY SECTION ANALYSIS

 

SECTION 1. Amends Subchapter H, Chapter 39, Utilities Code, by adding Section 39.3555, as follows:

 

Sec. 39.3555. REGISTRATION OF BROKERS. (a) Defines "brokerage services."

 

(b) Prohibits a person from providing brokerage services, including brokerage services offered online, in this state for compensation or other consideration unless the person is registered with the Public Utility Commission of Texas (PUC) as a broker.

 

(c) Prohibits a retail electric provider from registering as a broker. Prohibits a broker from selling or taking title to electric energy.

 

(d) Prohibits a retail electric provider from knowingly providing bids or offers to a person who provides brokerage services in this state for compensation or other consideration and who has not registered as a broker with the PUC.

 

(e) Requires a person who registers under this section to comply with customer protection provisions, disclosure requirements, and marketing guidelines established by the PUC and by this chapter (Restructuring of Electric Utility Industry) or Chapter 17 (Customer Protection).

 

(f) Requires the PUC to adopt rules as necessary to implement this section.

 

(g) Requires the PUC to process a person's application for registration as a broker not later than the 60th day after the date the person files the application.

 

SECTION 2. Effective date: September 1, 2019.