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Draft Conn. Order Would Broadly Define "Legal Agent" of Electric Supplier
September 30, 2011
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A draft Connecticut PURA decision (10-06-24) would conclude that a person is a "legal agent" of an electric supplier if such person "contracts with" or "is compensated by" the electric supplier to sell electric generation services, even if common-law factors, such as the person's authority to act on behalf or for the benefit of the supplier, are not met.
This inescapable conclusion, based on recent Public Act No. 11-80, had been challenged by the Retail Energy Supply Association, which had argued that: (1) brokers compensated by customers (notwithstanding the brokerage fee being rolled into the supplier's rate) act on behalf of the customer and (2) common law requires that an agency relationship only exists where one party has authority to direct the actions of another, which does not exist in typical relationships among suppliers and independent brokers.
Public Act No. 11-80 provides in relevant part:
"Any third-party agent who contracts with or is otherwise compensated by an electric supplier to sell electric generation services shall be a legal agent of the electric supplier. No third-party agent may sell electric generation services on behalf of an electric supplier unless (A) the third-party agent is an employee or independent contractor of such electric supplier, and (B) the third-party agent has received appropriate training directly from such electric supplier."
The drat PURA order would conclude that the express language of the Act requires that any person or entity who "contracts with" or is "compensated by" an electric supplier to sell electric generation services will be deemed to be a "legal agent" of such electric supplier, whether such person or entity is a broker, marketer, aggregator or sale representative. "It is irrelevant what title or legal descriptions the parties give themselves, the Authority will consider only three factors: the language of any contracts between the parties, whether compensation has been made by the supplier, and the nature of services performed by the agent," the draft states.
The draft notes that the Connecticut Supreme Court has also clearly stated that, "[t]he body of Connecticut's common law, which serves to supplement the corpus of statutory enactments, is powerless to abrogate the latter, either in whole or in part. Validly expressed legislatively [sic] must always control over contrary notions of the unwritten law."
"The Connecticut General Assembly is presumed to know the common-law principles of 'agency' when it enacted P.A. 11-80. However, it chose to adopt a more restrictive definition of agency for electric suppliers and their sales/marketing force, presumably to provide greater protection to electric customers and to resolve the problems that surfaced in the competitive electric market. The Authority is not free to ignore the express language of Section 113(f)(1)," the draft states.
The draft further finds that adopting RESA's standard of defining an agency relationship only where one party has authority to direct another, "would be nearly impossible to enforce."
"Where there is no contract between the parties, it would be impracticable for the Authority to enter the parties' minds to determine who is acting on behalf of whom, what authority was given, who is paying whom, etc. As such, anyone would be able to circumvent Section 113(f)(1) by simply claiming that they had no authority to act, their intent was to work for the customers, etc," the draft notes.
The draft would further determine that the term "to sell electric generation services" as used in Section 113(f)(1) is broad and expansive and, "includes any business activities conducted under an Electric Supplier License issued pursuant to Conn. Gen. Stat. §16-245, as amended, that involve customer contact through any media (in person, through the Internet, by telephone). "
"Such activities may include customer support services such as processing customer complaints or enrollments. The Authority recognizes that there might be certain business activities that would not logically be considered the 'selling of electric generation services' (e.g., providing computer system technical support, negotiating wholesale energy contracts, etc.). The Authority will review those activities on a case-by-case basis to determine whether the requirements of Section 113(f)(1) would apply," the draft holds.
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