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New York Staff Propose Requiring Minimum Risk Management Experience for ESCO Licenses, Would Require All ESCOs To Re-Apply for Licenses Under New Standards

July 29, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

New York PSC Staff proposed what were termed "interim" changes to the ESCO licensing standards in New York.

Staff ultimately proposes, "that the Commission move toward reliance on industry-developed eligibility requirements."

"The retail energy supply industry should develop clear and common standards for core issues of importance to consumers, including the ESCO’s ability to: provide high quality and responsive customer service; manage risk associated with offering fixed price products; use common, easy-to-understand contracts and/or contract language; use appropriate marketing practices; and demonstrate that the ESCO is performing well as part of a review to be conducted every two years. Staff should lead a collaborative with the industry and other interested parties and develop a proposed Code of Conduct on these and potentially other standard practices for Commission consideration," Staff said.

However, Staff proposed a series of changes to ESCO eligibility requirements to be in place for an interim period until such industry-developed changes are developed.

Most notably, ESCOs offering one or more fixed price products would be required to possess, "at least three years of experience in energy commodity risk management"

ESCOs could rely on a risk management services company for this expertise, Staff proposes

All ESCOs would be required to possess at least three years of customer service work experience.

Among other changes, Staff would require ESCO applicants to disclose decisions or investigations in other states that affect, or may affect, the ESCO’s ability to operate, such as suspension, revocation, or limitation of an ESCO’s operating authority; identify methods by which the Applicant intends to market to customers in New York; and list the number of complaints on file with public utility commissions in other states

Staff also proposes application and other fees for ESCO licensing.

Specifically, "Staff proposes that utilities consider development of market-based revenues associated with services they provide to ESCOs for performing services such as EDI testing as well as for value-added services such as displaying ESCO marketing information on the ESCO portion of bills rendered by utilities, consistent with Staff’s proposal that utilities develop platform services in Track Two of Case 14-M-0101.4 These market-based revenues may be in the form of an access or application fee," Staff said.

Staff proposes that the UBP be modified so that ESCOs deemed eligible to provide commodity service must begin serving customers within two years from the date of Staff’s eligibility letter. ESCOs which have not done so would have their eligibility to operate in New York rescinded.

Staff also proposes to explicitly detail the Commission’s authority to impose consequences on ESCOs which have a material pattern of consumer complaints regarding matters under the ESCO’s control, such as marketing practices. "After due process, the Commission could direct such ESCOs to file a customer service improvement plan or could impose other consequences such as suspending the ESCO’s ability to enroll new customers. This proposed requirement is consistent with the Commission’s objective of protecting the interests of existing and future consumers, and ensuring consumer confidence in retail energy markets," Staff said.

Existing ESCOs seeking to maintain their eligibility to operate in New York, would be required to complete a Supplemental Application which reflects the new, additional requirements approved by the Commission, Staff proposed. In recognition of these new requirements, Staff proposes that ESCOs have 90 days after the Commission Order to submit a completed Supplemental Application to the Department, or file with the Secretary a request for an extension of up to 90 days, including any justification for the additional time.

"ESCOs not submitting completed applications in the time required are subject to having their authority to provide service in New York rescinded by the Commission without further process," Staff said

Case 15–M-0127

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