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In Adopting Low-Income Shopping Moratorium, NY PSC "Significantly Departs" From Recommendations of Direct Energy

July 20, 2016

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

The New York PSC's written order adopting a moratorium which prohibits ESCOs from serving Assistance Program Participant (APP) customers cited Direct Energy as proposing a moratorium, but in adopting a moratorium, the PSC departed significantly from Direct Energy's proposal, which was an alternative offered after the PSC sought to essentially shut down the market as a whole (via its reset order), and after an APP collaborative expressed an unwillingness to adopt Direct's preferred solutions which maintain choice for all customers, and in response to proposals in the collaborative that would negatively impact the entire market, Chris Kallaher, Senior Director of Government & Regulatory Affairs for Direct Energy told EnergyChoiceMatters.com

"We definitely support everyone having the right to shop," Kallaher said, citing Texas as a model

"Certainly the idea of the moratorium came with some pretty significant provisos in the comments we filed," Kallaher added, noting that the PSC did not adopt these conditions (noted below) which would have still preserved choice for APP customers despite a moratorium.

Kallaher emphasized that Direct Energy was a proponent of using an aggregation approach (either opt-out or opt-in) to serve low-income customers, and Direct was part of a subgroup of five ESCOs which made an aggregation proposal (click here for story) to the APP collaborative, which did not gain support from other stakeholders.

Kallaher called an aggregation of APP customers Direct's "preferred" solution, and noted that such a program has been used elsewhere.

Kallaher also recounted that proposed requirements from other stakeholders in the APP collaborative to allow continued ESCO service to APP customers would have negatively harmed the retail market as a whole.

Specifically, due to concerns about customer privacy violations if utilities provided a customer's APP status to ESCOs, the collaborative was considering that, if ESCOs were able to continue to enroll APP customers under some type of regulated (e.g. guaranteed savings and/or value-add) product, ESCOs were going to be required to ask each and every prospective customer during the sales process whether the customer was on a utility assistance program -- a burdensome process customers would find insulting and which would not be conducive to customer satisfaction, Kallaher noted

In comments in the APP proceeding, Direct Energy had noted that proposals favored by a majority of stakeholders would, "turn every interaction between an ESCO and a potential customer into an embarrassing discussion of the customer’s financial condition."

"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 [prior APP] Order," Direct Energy had previously noted in comments

"[L]eading 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," Direct Energy had previously noted in comments

"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," Direct Energy had previously noted in comments, warning that the broader retail market could no longer be viable, "because the APP program requires commodity sellers to offend potential customers as a matter of course."

While the low-income proceeding was still being adjudicated, the PSC issued its broader retail market reset order, which (but for a court's temporary restraining order) banned ESCOs from serving mass market customers, except under limited circumstances

Kallaher saw the broader reset order as having many similarities in its requirements (limiting product offerings to guaranteed savings or a renewable [value-add] product) to the proposed APP restrictions, and saw the PSC's reset order as being driven, in part, by the ongoing concerns relating to ESCO service to APP customers, except now the entire market was affected.

That prompted Direct Energy, in reply comments in the reset order proceeding and in light of the aggregation proposal failing to gain support, to proffer a moratorium on ESCO enrollments of APP customers (by placing a switch block on APP customer accounts), as an alternative to imposing the protections initially proposed for APP customers only (guaranteed savings, etc.) on all mass market customers

However, Kallaher stressed that the PSC, in adopting a moratorium on ESCO service to APP customers, "significantly departed," from the proposal offered by Direct Energy.

Most notably, Direct Energy proposed that APP customers would be allowed to "opt out" of the moratorium. Under Direct's proposal, APP customers would be allowed to contact the utility to remove the switch block, at which point they could enroll with an ESCO.

Additionally, unlike the PSC's moratorium, Direct Energy's proposal would not have affected APP customers who were already on ESCO service (such customers would remain with their ESCO); Direct Energy's proposed moratorium would have been limited to APP customers on default service

Direct Energy had also proposed that the APP moratoriums be temporary, extending for no more than two years, and potentially lifted sooner upon a finding by the PSC that doing so would be in the public interest. While the PSC has described its moratorium as temporary, it did not set any specific time limit for the moratorium

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