Earlier this year, the New York Public Service Commission issued an order known as the PSC Reset Order, officially known as the “Order Resetting Retail Energy Markets and Establishing Further Process”.
Energy Service Companies in the area did not agree with the proposed changes outline in this Order because of three specific details or changes. These changes, if validated, would have had a significant impact on their business, especially in regards to how they handle and manage the enrolment of new energy customers.
In late July, the Supreme Court for Albany, New York decided that these key changes did in fact violate the process rights of Energy Service Companies. The reason for this is because the New York Public Service Commission did not give Energy Service Companies enough time to comply with the Order.
The Purpose of the PSC Reset Order
At a session of the Public Service Commission held in the City of New York on February 23, 2016 the published document or Order (15-M-0127) outlines many details, issues and changes. The organization’s primary concern seems to be that it feels that tighter elements of restriction on Energy Service Companies are required in order to save energy consumers from dishonorable business practices. The published document states that “the Commission again seeks to further restructure ESCO participation in the residential and small commercial retail electricity market. Based upon the record in the named proceedings, the Commission finds that additional restructuring is necessary to further protect consumers from high-pressure sales situations, deceptive marketing, slamming, and lack of expected savings.”
The document also states that “comments received by parties demonstrate a public desire and need to further strengthen regulatory oversight to enhance consumer protections. The Commission confirms its authority to oversee ESCO participation in the residential and small commercial markets as further described below to ensure sufficient protection of the public interest and that the prices that consumers pay for those services are just and reasonable.”
The major problem is that the New York Public service Commission indicated that starting just ten days after the date of the PSC Reset Order, Energy Service Companies could only enroll new small non-residential or new residential customers if they met (at least) one of the following conditions:
- The enrollment contract guarantees that the customer will not pay more compared to customers of receiving the same services from a utility.
- Contract for an electricity product must be generated and provided from a minimum of 30% renewable resources.
Other PSC Reset Order obligations included the following points,
- The CEO or equivalent member of the Energy Supply Company must file by 4:00pm on the 10th day after the Order is dated indicating that enrolments will meet the outlined conditions.
- The deadlines indicated within the Order can be extended on the Secretary’s discretion. Requests for extensions must be provided in writing, filed one day before the deadline and include an acceptable reason for the extension.
- The Order waives the requirement to newspaper publication of the tariff revisions due to the fact that the Order gives enough notices of the changes.
Energy Supply Companies – Disputed Changes
Within the PSC Reset Order, there were three changes in particular that would have a huge impact on the way that Energy Service Companies did business. These three impacts included,
- Contracts with mass market customers either guaranteed that 30% of the energy delivered be made up of renewable energy (biogas, hydroelectric, wind, solar, etc.), and also guaranteed savings when compared to utilities.
- Energy Service Companies would need to file in compliance with the New York Public Service Commission to indicate that renewed or new mass market customers met the PSC Reset Order conditions.
- Mass market customers would need to provide consent to the Energy Service Company before they could receive a change from a fixed rate or guaranteed savings contract to one that doesn’t offer guaranteed savings but does offer renewable energy.
In an article written by RTO Insider, the Supreme Court Judge in charge of the case indicated that the court was confused as to why the New York Public Service Commission was pushing to put the PSC Reset Order into affect when they knew many Energy Service Companies and other organizations still had many important questions left unanswered. The Honorable Judge stated in his 26 page summary document that the order ?is arbitrary and irrational in that it imposes the unexplained and harsh 10-day implementation period for the order, which amounts to a major restructuring of the retail energy market ? or even its collapse.?
The document also states “here, the Court notes that the Order provides for a sixty day period immediately following the order which the PSC explains is to answer, among others, the question “Whether prospective ESCO sales to mass market customers, including renewal of expiring contracts, should be limited to products that include `guaranteed savings’ or a defined energy-related value added service.”
The Court’s Decision
During the court proceedings, the court maintained that the New York Public Service Commission did in fact maintain jurisdiction over all Energy Supply Companies within the state. This was something that the Energy Supply Companies attempted to dispute, making this a huge win for the New York Public Service Commission. The reason for this is because it ensures that they can keep consumers from signing up with Energy Supply Companies that do not abide by the appropriate laws and conditions under which they are allowed to operate.
On the other hand, the New York Public Service Commission continues to defend their decision to create the PSC Reset Order stating that ?when ESCOs were charging multiple times the prices that utilities charge for energy, and consumer complaints of deceptive marketing practices poured in by the hundreds, the commission took bold action in February to protect consumers.? The New York Public Service Representative went on to say, ?But this injustice will be short-lived. ? The commission will easily address the procedural concerns raised by the court and will continue our work to ensure that all electric and gas consumers in New York have the protections they need and deserve.?