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Requiring ESCOs To Ask All Customers About Payment Assistance Status Could, "Seriously Damage," N.Y. Residential Market, Direct Energy Warns

February 1, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Requiring ESCOs to ask all potential customers whether they are currently receiving assistance under certain utility payment assistance program, "could seriously impede or damage the residential retail market in New York," Direct Energy warned in comments to the PSC

As previously reported, the PSC has ordered that participants in certain utilities assistance programs (APP customers) shall receive certain customer protections. Specifically, for an ESCO to serve APP customers, the ESCO, "must guarantee that the customer will pay no more, on an annual basis, than the customer would have paid as a full service customer of the utility, or the ESCO must provide Assistance Program Participants with energy-related value-added products or services."

Such order requires an ESCO to be able to identify APP customers.

However, some members of PSC Staff and consumer advocates have argued that a customer's status as an APP customer cannot be shared with an ESCO by the utility, absent affirmative consent, due to privacy laws and regulations

This leaves ESCOs with no alternative but to ask every prospective customer, at the start of any sales pitch, whether the customer is on a form of public assistance which qualifies the customer for APP status.

"It became apparent by the last meeting of the Collaborative that many participants (including at least some members of DPS Staff) take the view that compliance with the Commission’s Order will require the creation of an expensive, complex, and intrusive system the only certain product of which will be to turn every interaction between an ESCO and a potential customer into an embarrassing discussion of the customer’s financial condition," Direct Energy said

"For the potential new customers that ESCOs are marketing to every day, the first thing they will hear from the ESCO representative will be some version of the question 'Are you on public assistance?' followed immediately by the questions 'Do I have your permission to confirm whether you are on public assistance' and 'If so, will you please give me your account number, which I need to confirm whether you are on public assistance?' These questions will have to be asked of every single potential customer, despite the fact that, by most estimates available to the Collaborative, around 85 percent of customers will not be affected by the Order," Direct Energy said

"This reorientation of the sales experience to focus on a potential customer’s financial status will have profound effects on the retail market in New York, all of which will be negative in our view. First, leading off with questions regarding one’s financial status, especially pointedly directed toward the issue of public assistance, is almost certain to be seen as intrusive, even rude. It is difficult to think of any mass market consumer transaction that starts by asking if the customer is on public assistance. The great majority of potential customers, who are not on public assistance, are likely to be puzzled at best and annoyed or offended at worst by such a bizarre sales pitch. There is no reason to believe that these questions will be any better received by those who do qualify for the PSC’s APP program. If anything, those who are on public assistance may be even more offended than those who are not by being asked about it by a total stranger," Direct Energy said.

"It is not hyperbole to say that one possible outcome of a program that results in millions of New Yorkers being asked whether they are on public assistance will be the inevitable destruction of that program, with extremely negative consequences for important aspects of the State’s energy policy. For example, can the Commission realistically expect to implement the policies of the REV if the APP program effectively destroys the competitive retail mass market in New York? Well-capitalized, integrated ESCOs like Direct Energy are keenly interested in the vision of the energy market put forth in the REV, but if the market for commodity sales to residential customers is no longer viable because the APP program requires commodity sellers to offend potential customers as a matter of course, their ardor for the New York market will be substantially cooled. Before allowing (or requiring) this to happen, the Commission should, at the very least, direct Staff to make an attempt to gather some actual data about how customers (especially APP customers) would react to these kinds of questions and explore other approaches to assisting APP customers that do would not sabotage the retail market," Direct Energy said

Direct Energy said that the consensus view among ESCOs in a collaborative was that knowing a customer or potential customer’s APP status is essential for complying with the Commission’s Order and, since the utilities already have this information, the most straightforward way to allow ESCOs to comply with the Order would be to require the utilities to release the information to ESCOs actively marketing in New York

ESCOs believe that the release of a customer’s APP status is essential to the administration of the Commission’s extension of the State’s public assistance programs, and that doing so would be lawful and in the public interest. ESCOs have noted that the PSC has approved the release of customer information, without affirmative customer consent, in certain other proceedings in furtherance of state policy goals -- namely, as related to NiMo and Central Hudson energy efficiency programs, as part of ConEd's Connected Homes pilot, and as part of the SW municipal aggregation pilot.

Moreover, while statute prohibits the sharing of a customer's status in certain non-utility public assistance programs, Direct Energy stressed that ESCOs are not seeking to know the customer's status in any specific program. Rather, ESCOs need only know whether the customer has qualified for the APP protection (which can be triggered by status on one of several assistance programs), and ESCOs would not be informed of the customer's specific participation in any public assistance program.

Direct Energy urged the PSC to continue the case to further explore the legal and other issues regarding APP customers.

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