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NY PSC Staff Guidelines Answer Key Questions on ESCO Service During "Full Stop" Period (Treatment of Non-Month-to-Month Variable Customers, Consent for Compliant Product Switches, Renewable Compliance Details)

March 2, 2016

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

New York PSC Staff have issued today a guidance document concerning specifics as to how ESCOs may comply with the PSC's recent "full stop" retail mass market order.

Staff issued an updated guidance document today, March 2. Several drafts of the guidance document had previously been issued, and while, given that PSC Staff is still working to answer ESCOs' questions, the March 2 guidance document may not be "final" in terms of being the last iteration, it does appear to be final insomuch as it is no longer labeled as a draft and has been publicly posted on the PSC site

Click here for the March 2 guidance document

Staff has also posted other instructions and revised sales notices and customer discontinuance notices, click here to see these additional materials

The March 2 guidance document is designed to provide Staff's guidance to ESCOs seeking to comply with the February 23, 2016 Order Resetting Retail Energy Markets and Establishing Further Process (the Order) and the Uniform Business Practices (UBP). Nothing in the guidance document should be viewed as either supplementing or altering the terms of either the Order or the UBP. Rather the guidance document is being provided as a resource to ESCOs for compliance with the Order and the UBP.

As was first reported by EnergyChoiceMatters.com, the PSC has banned ESCOs from enrolling or renewing mass market customers, unless the product guarantees savings versus the utility rate over an "annual" period or the product includes at least 30% renewable electricity ("compliant product").

Moreover, ESCOs that currently serve mass market customers through "month-to-month variable rate agreements" must enroll those customers in a compliant product at the end of the current billing cycle or return the customers to utility supply service, the PSC ordered.

The March 2 guidelines address various situations not specifically addressed within the text of the Feb. 23 order, such as whether consent is needed for moving existing customers onto a compliant product, and how ESCOs may meet the 30% renewable compliant product.

According to the March 2 guidance, enrollment of new mass market customers in non-compliant products must be completed on or before March 4, 2016. For purposes of the Feb. 23 Order, an enrollment includes both execution of the customer agreement and the submission of an EDI transaction to the utility. Unless both steps are completed on or before March 4, 2016, the ESCO may only enroll the customer in a compliant product as described above.

As noted by RetailEnergyX.com, the Feb. 23 order provided that mass market customers served under "month-to-month variable rate agreements" must be switched to a compliant product or default service. The order did not define a "month-to-month variable rate agreement", leaving open the question of whether "term" variable contracts with monthly pricing and no cancellation fee (which appear similar to true month to month plans) were included within this provision

The March 2 guidance answers this question by specifying that, "[a] mass market customer served through a contract with a fixed term, whether with a fixed or variable rate, is not affected until that term ends."

For customers currently served under non-compliant month-to-month variable rate agreements, the March 2 guidance provides that:

a. ESCOs that currently serve mass market customers through non-compliant month-to-month variable rate agreements that intend to return those customers to utility supply service must provide notice to each of those customers by March 7, 2016 that they will be returned to utility supply service at the end of the billing cycle during which the notice period expires. Pursuant to the UBP, at least 15 days’ notice must be provided before returning the customer to utility supply service. If the sales agreement prescribes a longer notice requirement, the ESCO shall abide by the requirement in the sales agreement.

b. ESCOs that currently serve mass market customers through non-compliant month-to-month variable rate agreements that intend to enroll that customer in a compliant variable rate guaranteed savings product should provide notice to each of those customers by March 7, 2016 that they intend to enroll that customer in a guaranteed savings product at the end of the billing cycle during which the notice period expires. Pursuant to the UBP, at least 30 days’ notice must be provided for a change in sales agreement terms. If the sales agreement prescribes a longer notice requirement, the ESCO shall abide by the requirement in the sales agreement. Customer consent is not required in this circumstance because this is a “rate change” and therefore not material, pursuant to UBP subsection 5.B.5.d. (emphasis added), the March 2 guidance provides

c. ESCOs that currently serve mass market customers through non-compliant month-to-month variable rate agreements that intend to enroll that customer in a compliant renewable energy product must receive affirmative customer consent consistent with UBP renewal requirements, specifically subsection 5.B.5.d, because this constitutes a material change to the terms of the sales agreement. Pursuant to the UBP, a notification requesting consent must be provided to the customer at least 30 days in advance of a material change in sales agreement terms. If the sales agreement prescribes a longer period, the ESCO shall abide by the requirement in the sales agreement. The ESCO should enroll the customer in that product, if consent is received, or return the customer to utility supply service, if consent is not received, at the end of the billing cycle during which the 30 day period ends.

For customers currently served under non-compliant fixed-rate agreements who wish to retain such customers when the term ends, the March 2 guidance provides:

• ESCOs that currently serve mass market customers through a non-compliant fixed-rate agreement that intend to enroll that customer in a compliant guaranteed savings product should provide notice to each of those customers that they intend to enroll that customer in a guaranteed savings product at the end of the last billing cycle in the contract term. Pursuant to the UBP, at least 30 days’ notice must be provided for a change in sales agreement terms. If the sales agreement prescribes a longer notice requirement, the ESCO shall abide by the requirement in the sales agreement. Customer consent is not required in this circumstance because this is a “rate change” and therefore not material, pursuant to UBP subsection 5.B.5.d., the March 2 guidance provides

• ESCOs that currently serve mass market customers through a non-compliant fixed-rate agreement that intend to enroll that customer in a compliant renewable energy product that does not guarantee savings must receive affirmative customer consent, as required by the Order, prior to the end of the last billing cycle in the term. A notification requesting consent must be provided to the customer at least 30 days in advance of a material change in sales agreement terms. If the sales agreement prescribes a longer period, the ESCO shall abide by the requirement in the sales agreement. The ESCO should enroll the customer in that product, if consent is received, or return the customer to utility supply service, if consent is not received, at the end of the last billing cycle in the term. In order to demonstrate that affirmative consent has been received, ESCOs must either (a) receive verbal consent in a recorded telephone conversation or independent third party verification after explaining the following, (b) receive a signature on a document that explains the following or c) receive electronic consent consistent with the requirements consistent with UBP Section 5, Attachment 2

        i. The renewed contract does not guarantee the customer savings as compared to the utility price;

        ii. The renewed contract does not include a fixed rate (This point should be omitted if the renewed contract contains a fixed rate in addition to renewable energy)

        iii. The customer is free to return to utility service without penalty rather than renewing and may pay a lower price for energy if they do so.

Regarding how ESCOs may comply with the 30% renewable compliant product, the March 2 guidance provides that such renewable sources must be eligible under the Commission’s Environmental Disclosure Labeling Program (EDP) rules, under which energy labels are based on the environmental attributes of the energy purchased and which are not affected by the separate purchase of Renewable Energy Certificates (RECs) unless those RECs are eligible for conversion transactions

The March 2 guidance "briefly" summarized the EDP rules, but noted that the full EDP rules are on the PSC's website. The two methods by which an ESCO may acquire eligible renewable energy are here:

1. The ESCO enters into a bundled contract for energy and attributes (including RECs) with a renewable generator in New York or in an adjacent control area with a compatible tracking system (PJM or ISO-NE); or

2. The ESCO purchases, directly from the generator or through a broker or other third party, attributes (including RECs) created by a renewable generator in New York, PJM, or ISO-NE, purchases energy from the New York spot market, and executes a conversion transaction to assign the purchased attributes to the purchased energy.

        a. Note that RECs not generated within PJM may be available for sale in the PJM tracking system, but do not qualify for conversion transactions under EDP rules and therefore cannot be used to support a renewable product. ESCOs can determine whether a REC available in PJM’s tracking system is eligible by viewing its Unit ID. Eligible RECs will have a Unit ID beginning with “MSET,” while ineligible RECs will have a Unit ID beginning with “NON.”

3. If the REC is purchased in PJM or ISO-NE’s territory, it must be retired in that territory’s tracking system to reflect its usage in New York.

In order to comply with the 30% renewable product requirement, ESCOs should ensure that, for each calendar year, they make renewable purchases eligible under the EDP rules described above equal to or greater than the load served during the year under each renewable sales agreement that the ESCO started offering after February 23, 2016 multiplied by the percentage of renewable energy each sales agreement promises (for example, 30% of the load served under sales agreements offering 30% renewable energy).

The March 2 guidance also addresses how to treat non-residential customers with multiple meters for purposes of determining whether they are "mass market".

The determination of whether a customer is a mass market customer shall be performed at a customer level within a utility service territory, not at an account level. For customers with accounts in multiple service territories, the determination must be performed separately for each service territory. Mass market customers are defined as either:

a. A residential electric or gas customer;

b. A non-residential, non-demand metered electric customer (small non-residential electric customer). Customers with multiple meters are considered mass market customers for the purposes of the Order if all of their meters within a utility service territory are non-demand. Customers with multiple meters who have at least one demand meter within a utility service territory are not considered mass market customers for the purposes of the Order; or

c. A non-residential gas customer with annual gas consumption that does not exceed 750 dekatherms or MCFs per year (small non-residential gas customer). For customers with multiple meters, this threshold shall be calculated using the sum of all meters in the customer’s name within a utility service territory.

An ESCO may determine whether a customer is a mass market customer by:

a. For electric customers, determining the customer’s service class. Each electric utility will provide information on which service classes are demand metered and which are non-demand metered.

b. For gas customers, either requesting historic usage information from the customer or, with customer authorization, obtaining that information from the utility through an EDI transaction or another agreed upon method.

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