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New York Municipal Aggregations Will Be Allowed To Enroll Larger Customers on Opt-Out Basis

April 22, 2016

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

The New York PSC will allow municipal electric and natural gas aggregations to include in their pools on an opt-out basis customers larger than those customers recently defined as mass market customers.

Specifically, the PSC in its February 23 retail market reset order defined small non-residential customer as, for electricity, a non-demand metered customer, and, for natural gas, either a non-demand metered electric customer or a non-residential gas customer with annual gas consumption that does not exceed 750 dekatherms per year or the equivalent.

However, in determining customers that are eligible to be enrolled in a municipal aggregation on an opt-out basis, the PSC did not use the February 23 definition for small non-residential.

Instead, the PSC established a list of service classes specific to each utility that may be enrolled by municipal aggregations on an opt-out basis, with these service classes in some cases including customers that are larger than the definition of small non-residential used in the retail market reset order

See the service classes at each utility which may be enrolled by a CCA on an opt-out basis on page 62 of the PSC's order (click here)

The PSC justified its decision by citing the complexity of certain rate classes, stating, "Basing this [opt-out eligibility] determination on service class, rather than strict adherence to the definitions of small non-residential customers in the February Reset Order, is appropriate because it will reduce cost and complexity for utilities and CCA Administrators and because large non-residential customers, as sophisticated energy consumers, are at least as capable of deciding whether to opt-out as residential and small non-residential customers."

As is common, customers already on competitive supply may not be enrolled on an opt-out basis.

Furthermore, the PSC ruled that customers who have placed a freeze or block on their utility account, to prevent the switching to competitive supply, shall not be enrolled on an opt-out basis

Municipal aggregations will be permitted to aggregate electric supply, gas supply, or both.

Although the PSC said that municipal aggregations "should" explore ways to integrate various energy efficiency and distributed energy resources into the program, the PSC did not include a requirement for such value-added services.

The products offered by municipal aggregations to mass market customers must conform to the limitations on ESCO service as established in the February 23 retail market order, and any subsequent orders addressing eligible mass market products. "Such decisions will not disrupt or require renegotiation of existing CCA contracts," the PSC said.

Municipal aggregations may serve low-income assistance program customers on an opt-out basis subject to any PSC rules governing ESCO service to such customers at the time of enrollment

The PSC ruled that municipal aggregations shall provide a 30-day initial opt-out period.

Furthermore, customers must be permitted by the aggregation's ESCO to opt-out, "and return to utility service," [emphasis added] any time before the end of the third billing cycle after enrollment without penalty. Based on such language, after the initial opt-out period, it would appear opt-outs under the three billing cycle grace period may only be accomplished by returning to default service, and may not include a switch to another ESCO.

Municipal aggregations may charge early termination fees subject to the grace period until the end of the third billing cycle after enrollment, during which any cancellation fee will be waived

Any cancellation fee must be consistent with the then-effective UBP provisions, which at this time are a maximum of $100 for a contract with less than 12 months remaining, $200 for a contract with a remaining term of more than 12 months, or twice the estimated average monthly bill

Municipalities authorized to form municipal aggregations include cities, towns and villages. Counties will not be eligible to set up municipal aggregations, but county governments may encourage and coordinate the municipalities within the county to form an inter-municipal municipal aggregation and work to support municipal aggregations in an administrative role for eligible cities, towns and villages

Municipal aggregations are required to file implementation plans with the PSC, which require approval prior to commencement of service. The PSC said that as the municipal aggregation market develops, it may eventually determine that individual review of such plans is no longer needed.

Municipal aggregations administrators will be permitted to collect funds, through the supply charge, to pay for administrative costs associated with running the aggregation program. Because most municipal aggregation customers will receive a single bill from the utility, any municipal aggregation customer payments to the municipal aggregation administrator will have to be negotiated as part of the contract and built into the per kWh rates. Therefore, the payments to the municipal aggregation administrator for municipal aggregation administrative purposes will be processed and remitted by the ESCO.

The PSC said that including a fee in municipal aggregation collections to cover lost sales tax revenues, "would be improper and inconsistent with the intent of the tax law, which permits municipalities to impose sales tax on the distribution of energy provided by utilities when a customer does not take commodity service from an ESCO."

"For that reason, the municipality shall negotiate a fee with the ESCO based only on the administrative costs of the program. Information on the administrative fees collected and on the costs of the program shall be included in required annual reports," the PSC said

Municipalities will not be permitted to allocate a portion of the municipal aggregation customer payments to a clean energy or public benefit fund at this time. Permitting separate collections for a municipal clean energy fund would result in double collections from municipal aggregation customers, who will continue to pay the System Benefit Charge (SBC), the PSC said.

Utilities will be permitted to charge a fee for the data they provide to municipal aggregation programs. "That fee should be entirely or mostly backloaded and dependent upon the signing of an agreement with an ESCO and the enrollment of customers, to avoid creating barriers for municipalities considering and developing CCA programs and to permit the funds to pay those fees to be provided by a selected supplier and recovered through the supply service," the PSC said

Case 14-M-0224

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