Constellation Says Illinois Rules Wrongly Define Broker Independence as Absence of Contract with Supplier

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February 28, 2011  

Illinois' current and proposed rules regarding electric agent, broker and consultant licensing "wrongly impl[y] that the existence of any agreement between a supplier and an ABC renders the ABC no longer independent, or potentially makes them an affiliate of the supplier," Constellation NewEnergy said in comments on proposed revisions to Part 454 of the administrative rules (Docket 10-0733).

As only noted in Matters, the proposed changes largely deal with statutorily required modifications regarding applicable remuneration and pricing disclosures (see 12/22), but Constellation took issue with an existing provision of the rules which would be continued (although renumbered) under the modifications.

The current and proposed rules require than an ABC, "[n]ot hold itself out as independent or unaffiliated with any RES [retail electric supplier], or both, or use words calculated to give that impression, unless the person or entity offering service under Section 16-115C of the Act has no contractual relationship with any RES or its affiliates regarding retail electric service in Illinois."

Constellation said that this provision elevates any contract between a supplier and broker as creating an agent or affiliate relationship, when such contracts may simply be required to govern terms of under which a supplier will supply pricing to an independent broker, and address operational and administrative issues which do not provide that the broker is acting on behalf of the supplier.

"[A] contract between the ABC and the RES clarifies the relationship between the RES and the ABC, is necessary to govern interaction of the parties, and ultimately protects all involved in the transaction, including the customer. Therefore, the existence of a contract alone does not preclude an ABC from being independent of any supplier," Constellation said.

Constellation also objected to language, which directly tracked the statute, that requires the ABC to disclose the, "total price per kilowatt-hour, and the total anticipated cost, inclusive of all fees or commissions received by the licensee, to be paid by the customer over the period of the proposed underlying customer contract."

Constellation said that the term "cost" seems to require disclosure of the total price for the contract term, rather than a price per kWh. "Energy supply pricing is not provided on a fixed price per month basis by the utility, and requiring a price for the contract term therefore represents an inappropriate figure for comparison," Constellation said.

MidAmerican Energy Company offered comments on the same provision, noting that the proposed rule simply recites statutory language regarding pricing and cost disclosures.

"[T]hat language alone may not result in the provision of the type of information that permits a customer to make a fully informed decision about an offer for electric service or to make an apples-to-apples comparison of multiple offers. Accordingly, it would be appropriate for the Commission to provide clarity regarding this disclosure requirement in a manner that more fully facilitates a straightforward, merit-based choice by a customer," MidAmerican said.

"MidAmerican believes that a formulation of the disclosure requirement that specifies the components to be included and excluded from the total price per kilowatt-hour might achieve the desired goal, provided that such an alternative results in sufficient clarity and parity of information discussed above. Thus, MidAmerican proposes that the amended rule direct ABCs to make the required disclosures using similar volume assumptions between multiple supplier offers, and that the total price be presented on a kWh basis and include all costs excluding utility delivery charges." MidAmerican did not offer specific language to implement its proposal.

BlueStar Energy Services, "by and large does not support the proposed amended rules on ideological grounds," but agreed that most of the changes were consistent with the modified ABC law.

However, BlueStar did object to the proposed language which would, for disciplinary actions against ABCs, set forth a broad set of criteria that the Commission must use when determining the length of a suspension for the first violation. Such criteria would include whether the violation was deliberate or inadvertent, the harm or potential for harm to customers, and the effect or potential effect on competition.

BlueStar said that these criteria do not originate in the statute, and are overly subjective and vague. BlueStar also called the criteria unnecessary since, as required by statute, the rule would provide the Commission with discretion in determining disciplinary actions, including the discretion to suspend a license.

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