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Breaking: Judge Grants Temporary Restraining Order Preventing Enforcement Of NY PSC Full Stop Order

NEM, ESCOs Seek Restraining Order Against New York PSC in Court, Injunction Against Enforcement Of "Full Stop" Retail Markets Order

March 4, 2016

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

Update #3, 4:58 pm: Several orders in response to specific ESCO petitions have been issued. At least one of the temporary restraining orders specifically applies to Ordering Clauses #1-3 of the PSC's Feb. 23 order, and stays their enforcement.

The now-stayed Ordering Clauses #1-3 had ordered: the prohibition of enrollments or renewals on non-compliant products effective March 4; consent for switches/renewals to a renewable compliant product; and the CEO certification requirement

Depending on how you interpret the term "renew" in Ordering Clauses #1-3, it's ambiguous as to whether Ordering Clauses #1-3 addressed the requirement to return non-term month-to-month rollover customers to default service or a compliant product (notably, no other ordering clauses addressed this issue on point, which was included in the text of the order). However, even though such requirement may not have been contained in an Ordering Paragraph, ECM understands that they various temporary restraining orders are broadly being read as staying the Feb. 23 order in its entirety in order to preserve the status quo, and therefore the requirement to move month-to-month rollover customers is stayed as well

Update #2, 3:20 pm: ECM understands that the temporary restraining order covers at least those parts of the Feb. 23 PSC order with a March 4 compliance date, and is effective through at least April 14. This will allow the court to address procedural items related to a sought preliminary injunction

The Retail Energy Supply Association issued the following statement:

The Retail Energy Supply Association (RESA) is gratified that the court has ordered a temporary stay of New York Public Service Commission (PSC) rules that effectively eliminated the right of residential and small commercial customers in New York to choose among competitive energy offerings. This is great news for consumers as it protects their right to freely decide for themselves what energy products offer value. However, ongoing legal review of the PSC's order will continue.

RESA looks forward to working collaboratively with the commission regarding its concerns in a productive way so that consumers retain the right to choose their energy provider and the value added products and services that come along with such a choice.

We will continue to support development of best marketing practices, and will continue our efforts to secure the benefits of competition for New York consumers.

Update, 10:45 AM: ECM understands that a NY judge this morning has granted a temporary restraining order or otherwise similar relief preventing enforcement of the NY PSC's Feb. 23 "full stop" retail markets order (or at least parts of it). While ECM has not been able to confirm the specifics, ECM understands that a temporary restraining order was granted, though the extent of such temporary restraining order was not immediately clear, including if it covered all of the orders with a March 4 compliance deadline, and for how long the temporary restraining order would last.

This is a breaking news alert, more details as it develops. Check this story throughout the day for more

Earlier:

The National Energy Marketers Association and several ESCOs have petitioned for a temporary restraining order and injunction against the New York PSC's enforcement of its full stop retail markets order, which otherwise takes effect at 4pm March 4.

Click here for background on the full stop order, which severely limits the products offered by ESCOs and requires the return of customers to default service

The request for a restraining order was filed contemporaneously with a complaint against the PSC by NEM and the ESCOs which sought to void the order. The complaint was filed with the Supreme Court of the State of New York for the County of Albany, and was filed by the National Energy Marketers Association; Bluerock Energy, Inc.; Bounce Energy NY, LLC; Direct Energy Business Marketing, LLC; Direct Energy Business, LLC; Direct Energy Services LLC; Energetix, Inc.; Gateway Energy Services Corp.; North American Power & Gas, LLC; NYSEG Solutions, Inc.; Residents Energy, LLC; and Verde Energy USA New York, LLC.

ECM understands that the Retail Energy Supply Association and at least one other ESCO filed a complaint seeking similar relief

"The implementation of this Order will cause immediate and irreparable harm to the reputation, finances, and goodwill of Petitioners and other ESCOs, and will almost certainly drive many ESCOs out of business entirely. Conversely, there is no identifiable harm that will occur to anyone if the twenty-year status quo is maintained until after the Court can adjudicate this matter on the merits," the NEM petition said

"In its Order, the Commission [PSC] takes an 'act first, ask later' approach, which puts a gun to head of all ESCOs and requires them either to decide between two unreasonable choices: (i) guarantee that they will not charge more than what the non-competitive local utility may charge in the future, even if that necessarily means that ESCOs must operate at a loss, or else (ii) immediately send hundreds of thousands of their hard-earned and loyal customers to the ESCOs’ competitor – that same local utility (which provider the customer previously had elected to leave)," NEM and the ESCOs said in the complaint

NEM and the ESCOs said that the PSC's stated justification for the order -- a citation to the number of ESCO complaints -- lacks merit, given that ESCOs complaints have been decreasing

"Put in context, 1,300 complaints reflects a complaint rate of one-half of one-tenth of one-percent (0.05%) of New York ESCO customers. Moreover, for the vast majority of ESCOs, the number of complaints has actually decreased in the past year. The Commission’s own statistics show that, if you include all but one ESCO (which is not a Petitioner here), the number of complaints in 2015 actually decreased by more than 11%, as compared with complaints lodged the prior year," NEM and the ESCOs said in the complaint

"The Commission’s claim that complaints are steadily increasing is not an industry phenomenon that requires drastic and unprecedented actions by the Commissions. Indeed, for more 99% of the ESCOs, the number of initial complaints dropped, the number of escalated complaints dropped, and the ratio between the two also dropped," NEM and the ESCOs said in the complaint

"A small number of customer complaints does not justify shutting down an industry, particularly when the Commission and the Attorney General have more than adequate enforcement tools at their disposal. Moreover ... a significant number of the complaints concerned the Commission’s own actions – not actions taken by the ESCOs," NEM and the ESCOs said in the complaint

Specifically, NEM and the ESCOs noted that in the past, certain complaints lodged against ESCOs have been the result of the PSC's decision to artificially cap NiMo's rates charged immediately after the polar vortex, artificially depressing the price to compare, with NiMo's actual costs allowed to be recovered over a longer period.

NEM and the ESCOs said that the PSC plainly lacks statutory authority to control ESCO rates, because the Legislature never conferred jurisdiction on the Commission to set the rates that ESCOs can charge their customers.

Moreover, NEM and the ESCOs alleged that the PSC's order should be declared void because they alleged the order is arbitrary and capricious, as: (i) the rate ceiling (guaranteed savings requirement) is economically unjustifiable and bears no meaningful relationship to the Order’s stated purpose; (ii) the rate ceiling is not based on any reasonable factual record; and (iii) the Commission breached requirements under the New York State Administrative Procedure Act in issuing the Order.

Furthermore, NEM and the ESCOs said that the PSC's Order is internally inconsistent with respect to the ceiling placed on ESCO rates, in stating ESCOs may charge "no more" than the utility, but then later requiring "savings."

"For example, the Order says repeatedly that, as a condition of continued customer enrollment, ESCOs must guarantee 'that the customer will pay no more than' if she were a full-service utility customer. Elsewhere the Order requires ESCOs to ensure 'guaranteed cost savings' for customers. The Order thus simultaneously permits Petitioners and other ESCOs to meet utility rates while requiring them to beat those same rates. That is nonsensical," NEM and the ESCOs said in the complaint

"In addition, confirming the Commission’s failure to promulgate a sensible Order, it has issued no less than three guidance documents (each of which is inconsistent with the other) in the six days preceding the March 4 certification deadline," NEM and the ESCOs alleged in the complaint

"Consistent with the vagueness that plagues the Order, Commission staff repeatedly punted when asked routine questions about the Order’s requirements during a February 29, 2016, question-and-answer session, explaining that they would have to figure out answers during the 60-day period even though that period postdates the March 4 compliance certification deadline. The Commission is thus asking ESCOs to certify that they will comply with an Order that the Commission does not yet understand and cannot fully explain," NEM and the ESCOs alleged in the complaint

NEM and the ESCOs alleged in the complaint that the Order failed to comply with the notice requirements of the State Administrative Procedures Act, and also alleged that the Order violated various provisions of the U.S. and New York State constitution

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