Energy Choice
                            

Matters

Archive

Daily Email

Events

 

 

 

About/Contact

Search

N.Y. PSC Staff Tell ESCOs Staff Will Insist Customers Be "Re-rated" If Being Charged Pass-Throughs Not Disclosed in Customer Disclosure Statement

June 21, 2016

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

Staff of the New York PSC recently issued an email to all ESCOs warning ESCOs that, to the extent ESCOs are charging a pass-through not listed in the customer disclosure statement, then Staff will insist such customers be, "rerated."

"Please be advised, any ESCO currently using sales agreements that have any terms within the body of the agreement that effect the price of commodity (such as language that allows for pass-through of certain costs) must disclose such costs or potential costs in the customer disclosure statement," said the email from the PSC's Office of Consumer Services – Retail Access

"Section 5.B.4.b of the UBP States: the Customer Disclosure Statement shall also contain the price term of the agreement. In the event that the text in the Statement differs from or is in conflict with a term stated elsewhere in the agreement, the term described by the text in the Statement shall constitute the agreement with the customer notwithstanding a conflicting term expressed elsewhere in the agreement. This provision applies to both Residential and Non-Residential agreements," the email noted

"If you currently have contracts with this type of language and have not revised them, please do so immediately and send in for staff review. We have currently been reviewing contracts and dealing with revisions on a case by case basis, but you are required per UBP Section 5.B.4.b. to disclosure the price of the agreement in the customer disclosure statement: If costs that are not included in the disclosure statement are imposed on a customer, we will insist that the customer be rerated," the email said

ConEdison Solutions made note of the Staff email in reply comments concerning various Staff whitepapers in the retail market reset proceeding, noting that the UBPs would benefit from further clarity on this issue, as relying on Staff informal guidance could create competitive disadvantages for ESCOs following Staff's directive, versus ESCOs who challenge Staff's interpretation, or are not following Staff's directives because they are unaware of such directive.

Specifically, ConEdison Solutions said that in its recent retail access eligibility triennial review, Staff requested that, due to a regulatory change provision in the company's contract, that ConEdison Solutions include the following text in the "price" section of its Customer Disclosure Statement (CDS): "All prices may be modified due to a subsequent change in a law, rule, regulation, tariff or regulatory structure. See Section 12 of the Agreement."

"ConEdison Solutions supports full disclosure of important contract terms to customers. ConEdison Solutions, after discussion with Staff, agreed to make the requested change to its contracts. However, ConEdison Solutions remains concerned that there is not uniform compliance with or awareness of this issue within the ESCO industry," despite Staff's recent email which attempted to address the issue

"ConEdison Solutions appreciates Staff’s efforts to inform ESCOs of Staff’s interpretation of the UBP as to this disclosure requirement. However, there is no specific provision in the UBP that speaks directly to the issue of disclosure around regulatory change adjustments or other pricing adjustments. In light of this, new ESCOs entering the market may not be aware of Staff’s guidance as outlined in the email. Even more concerning, an ESCO may take a different interpretation of the UBP than Staff and purposefully choose not to disclose its regulatory change or price adjustment provision in the CDS. ConEdison Solutions is concerned about the potential competitive disparity that could occur as a result of inconsistent compliance with this disclosure requirement. An ESCO that clearly highlights its regulatory change or other price adjustment provision in its CDS may lose a customer to another ESCO that excludes this provision from the prominent CDS," ConEdison Solutions said

"This concern is not purely theoretical," ConEdison Solutions continued, providing examples of Customer Disclosure Statements from, "well-known ESCOs active in the New York market," which lack any disclosure about regulatory change or other provisions despite such provisions existing in the ESCO's contract. ConEdison Solutions did not identify the ESCOs by name in its comments

"At the time of this writing, ConEdison Solutions is aware of several ESCOs that are marketing services under contracts that include regulatory change or other price adjustment provisions but who are not including disclosure of such provisions in the CDS. The examples below are excerpts from actual New York ESCO contracts that are publicly posted to various ESCO marketing websites. In the ESCO’s corresponding CDS summary box for each of these examples, there is no statement in the Price section or elsewhere that references the price adjustment provision," ConEdison Solutions said

To address the matter, ConEdison Solutions recommended that the UBP be modified to provide, "If an ESCO includes a contractual provision that allows for a price adjustment or the pass-through of additional costs due to changes in laws, regulations or other events, the ESCO shall include a clear statement disclosing this price adjustment or pass-through provision in the Price section of the Customer Disclosure Statement."

In addition to this explicit revision to the UBP, ConEdison Solutions recommends that the Commission clarify that this CDS disclosure is required for any type of price adjustment or cost pass-through contemplated in an ESCO contract, not just regulatory change-driven adjustments. ConEdison Solutions noted that some ESCOs include provisions that allow for an adjustment to the price for factors such as:

• Changes to certain identified wholesale cost components such as transmission, ancillary services, capacity, balancing and operating reserves, etc;

• Changes to a customer’s usage characteristics, such as consumption falling above or below a usage bandwidth provision, or changes to the customer’s capacity tag or load factor;

• General provisions that preserve the right to adjust prices for factors beyond the ESCO’s control.

"Further, some ESCOs may structure a product that may be marketed as fixed or partially fixed. In these situations, the ESCO may present a single price to the customer, such as 9 cents per kWh, but this price does not include certain components that are specified in the contract as a pass-through item. This may include components such as capacity, ancillary services, renewable energy compliance requirements, etc. Under the recommended UBP change suggested above, an ESCO would be required to also fully disclose these pass-through items in the CDS. ConEdison Solutions recommends that, regardless of the event driving the change or the specific wording of the contract, the ESCO should disclose the potential for the price adjustment or pricing pass-through in the CDS," ConEdison Solutions said

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
NEW! -- Client Services Lead
NEW! -- Billing Analyst -- Retail Supplier
NEW! -- Pricing and Commercial Analyst -- Retail Supplier
NEW! -- Door to Door Sales Team Manager -- Retail Supplier
NEW! -- Power/Natural Gas Business Development Manager -- Retail Provider
NEW! -- Gas Scheduler -- Retail Supplier
NEW! -- Sales Channel Manager -- Retail Supplier
NEW! -- Billing Manager -- Retail Supplier -- Houston
NEW! -- Account Associate / Account Manager -- Retail Supplier
NEW! -- Director of Commercial Sales -- Retail Supplier -- Houston
NEW! -- VP, Business Development -- Retail Supplier

Email This Story

HOME

Copyright 2010-16 Energy Choice Matters.  If you wish to share this story, please email or post the website link; unauthorized copying, retransmission, or republication prohibited.

 

Archive

Daily Email

Events

 

 

 

About/Contact

Search