Public Service Commission Resets Retail Energy Marketplace:
All ESCOs Required to Re-Register Under New Rules and Completely Revise Product Offerings
On December 12, 2019, the New York State Public Service Commission (“Commission”) voted to reset the retail energy marketplace by requiring all Energy Service Companies (ESCOs) to re-register for eligibility to serve customers. While the final order remains to be issued, the Department of Public Service (DPS) explained that as part of the re-registration process, it will subject each ESCO to new eligibility requirements and require all ESCOs to modify their product offerings to fit one of four categories.
Based on discussions at the session meeting, it appears that permissible products under this new regulatory landscape are limited to:
- Variable priced products that include guaranteed savings;
- Fixed price products that are priced as a trailing historic average plus 5%;
- Energy commodity that includes a renewable energy component that is 50% greater than the Renewable Energy Standard (RES); or
- Energy commodity that includes narrowly defined “energy-related” value-added products (the Commission mentioned that only Agway Energy has an approved product).
Furthermore, new eligibility requirements will be comprised of eight major components:
- ESCOs shall identify their methods used to market to customers.
- ESCOs shall disclose specified complaint data that have been made in other states.
- ESCOs shall disclose specified security breaches in other states.
- ESCOs shall specify policies directed at securing customer data.
- ESCOs shall disclose bankruptcy history.
- ESCO officers shall affirm via affidavit that it will comply with applicable rules and regulations.
- In order to continue to enter new agreements with customers in New York State, ESCOs must submit updated eligibility applications within 90 days.
- DPS staff will “substantially review” eligibility applications and, where appropriate, recommend to the Commission that eligibility be denied.
Commissioner Diane Burman expressed concern that the pending order does not appear to impose a time frame for DPS staff to “substantially review” and recommend action, potentially causing market disruption and issues of fairness if the applications are not timely decided, or decided inconsistently.
Concerns were also expressed regarding how ESCOs will migrate their existing customers to these newly required products, what type of consent would be required, how that consent needs to obtained and when. The Commission explained that there would be a 60-day lag period before the new Uniform Business Practices (UBP) would go into effect, after which all new ESCO contracts would need to satisfy the criteria set forth in the order. ESCOs would need to obtain “affirmative consent” from all customers migrating to a new product, even if that customer is enrolled in an automatic renewal agreement.
With this upcoming order, there is a growing disconnect between the UBP rules for ESCOs and rules for other customer-facing energy product markets such as Community Distributed Generation and Community Choice Aggregation. As the Commission has in the past expressed its intent to merge the ESCO UBPs and UBPs for Distributed Energy Resources into one regulatory framework, these requirements may soon be replicated in other energy market sectors.
These new eligibility requirements represent a significant revision to the retail energy market rules and will require coordination on behalf of the retail energy market industry to ensure the transition occurs in a fair and reasonable manner.
Phillips Lytle’s Energy Practice Team has extensive expertise in Public Service Commission/Utility regulatory matters, including all aspects of retail energy regulation in New York State. For more information about Phillips Lytle’s Public Service Commission expertise, please contact Thomas F. Puchner at (518) 618-1214, tpuchner@phillipslytle.com, or Kevin C. Blake at (716) 847-7082, kblake@phillipslytle.com.