New York Governor Signs Law Requiring Registration Of Retail Energy Brokers; Up To $100,000 Bond; Disclosure Of Compensation -- EnergyChoiceMatters.com

New York Governor Signs Law Requiring Registration Of Retail Energy Brokers; Up To $100,000 Bond; Disclosure Of Compensation

December 26, 2022

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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New York Governor Kathy Hochul has signed Senate Bill S9414 which requires: (1) the registration of retail energy brokers and consultants (including a new bonding requirement up to $100,000), (2) the disclosure of broker compensation to customers, and (3) the prohibition of certain rebates

Senate Bill S9414, signed as Chapter 787, provides that, "No person, firm, association or corporation shall act as an energy broker or energy consultant without first registering with the commission [PSC]."

Under the law, "energy broker" means, "an entity that assumes the contractual and legal responsibility for the sale of electric supply service, transmission or other services to end-use retail customers, but does not take title to any of the electricity sold, or an entity that assumes the contractual and legal obligation to provide for the sale of natural gas supply service, transportation or other services to end-use retail customers, but does not take title to any of the natural gas sold."

Under the law, "energy consultant" means, "any person, firm, association or corporation who acts as broker in soliciting, negotiating or advising any electric or natural gas contract, or acts as an agent in accepting any electric or natural gas contract on behalf of an ESCO."

The law provides that, "An energy broker or energy consultant shall register with the commission authorizing such registered energy broker or energy consultant to act as an energy broker or energy consultant in a manner prescribed by the commission [PSC]; provided that such: (i) energy broker demonstrates financial accountability as evidenced by a bond or other method of financial accountability in an amount not less than one hundred thousand dollars; and (ii) energy consultant demonstrates financial accountability as evidenced by a bond or other method of financial accountability in an amount not less than fifty thousand dollars."

Each registered energy broker or energy consultant shall annually pay the PSC a five hundred dollar registration fee, the law provides

Under the new law, energy brokers and energy consultants shall be required to disclose their form and amount of compensation to customers, "via a conspicuous statement on any such contract or agreement between the energy agent, energy consultant, energy broker or energy intermediary and its customer."

"If an energy service company [ESCO] collects broker compensation on behalf of an energy broker or energy consultant, such broker compensation shall be added as a provision to the customer disclosure label and shall reflect the amount and method of broker compensation," the law states

Concerning rebates, Senate Bill S9414 provides, "No energy broker, energy consultant or any other person acting for or on behalf of the energy broker or energy consultant shall offer or make, directly or indirectly, any rebate of any portion of the fee, premium or charge made, or pay or give to any applicant, or to any person, firm, or corporation acting as agent, representative, attorney, or employee of the energy rate payer or any interest therein, either directly or indirectly, any commission, any part of its fees or charges, or any other consideration or valuable thing, as an inducement for, or as compensation for, any energy supply or energy-related business, nor shall any applicant, or any person, firm, or corporation acting as agent, representative, attorney, or employee of the energy rate payer or of the prospective energy rate payer or anyone having any interest in the real property knowingly receive, directly or indirectly, any such rebate or other consideration or valuable thing."

The law further provides that, for the purposes of the above rebate provision, "an inducement for, or as compensation for, any energy supply business" shall mean, "a benefit given with the intention to compensate or offer compensation, directly or indirectly, for any past or present placement for a particular piece of energy supply or energy-related business to any applicant, or person, firm, or corporation acting as agent, representative, attorney, or employee of the energy rate payer, lessee, mortgagee or the prospective energy ratepayer, or any interest therein."

Concerning the rebate prohibition, the law states that, "Nothing contained in subdivision one of this section to the contrary shall prohibit any energy supplier corporation, energy broker, or energy consultant, or any other person acting for or on behalf of the energy service company, energy broker or energy consultant from undertaking any usual and customary marketing activity aimed at acquainting present and prospective customers with the advantages of using a particular energy supplier, energy broker, or energy consultant that are not intended for the purpose of a reward for the future placement of, or the past placement of, a particular piece of energy supply business."

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