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NY PSC Clarifies ESCO Low-Income Moratorium, Allows Service To Continue To Certain Variable And Month-to-Month Customers Until Contract Expiration

September 20, 2016

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

The New York PSC has issued a written order clarifying certain provisions of its moratorium on ESCO service to assistance program participant (APP) customers, most notably clarifying that ESCOs may continue service to certain variable and month-to-month customers until contract expiration.

In the PSC's July 15 order, the PSC had ordered that ESCOs shall cease serving APP customers at the expiration of the customer's existing agreement with the ESCO, and said that, "With respect to customers on variable rate, month-to-month contracts, the expiration of the agreement is at the end of the current billing period."

RESA had sought clarification of this directive.

RESA asked that the Commission recognize that monthly variable rate contracts can also have a set contract term, and thus, the expiration should reflect the actual term of the contract.

In response, the PSC said that, "The July Order discussed month-to-month, variable rate agreements as expiring at the end of the existing billing cycle. It is the month-to-month nature of those agreements that result in expiration at the end of the existing billing cycle, not the variable rate component."

"Therefore, a variable rate agreement with a set term would expire at the end of that term, and the variable rate nature of the agreement would not cause the contract to be canceled earlier," the PSC clarified.

RESA also noted that there are certain products where the term is month-to-month but the customer receives a gift, such as two months of free service, if the customer remains with the ESCO for a designated period, such as six or 12 months. RESA requested clarification on whether, in such a situation, the ESCO is allowed to retain the customer until the gift-term period is concluded and the customer receives the gift.

"With respect to gift-term agreements entered into prior to issuance of the July Order, the ESCO should continue to serve the customer until the end of the gift term even though those agreements are month-to-month," the PSC clarified.

"This would also be true for agreements that guarantee savings with respect to the utility rate, and which effectuate the guaranteed savings through a true-up at the end of a specified time period. With respect to these types of products, the agreement, although month-to-month, will be deemed to expire at the end of the billing period on which the guaranteed savings true-up is provided to the customer. To do otherwise would deny the customer of a potentially significant benefit that was a consideration in entering into the agreement. However, this is not to be construed as creating an ERVA [energy-related value-added product] that is an exception to the moratorium on APP service. Therefore, only those gift-term agreements that were in effect prior to the implementation of the moratorium on September 13, 2016 will be permitted to continue until expiration of the gift term," the PSC said

National Fuel Gas Distribution noted that ESCO consolidated billing is used in its territory, and for such customers, National Fuel Gas Distribution cannot determine the customer's APP status.

In response, the PSC ordered that ESCOs that participate in the ESCO Combined Billing (ECB) model in NFGD’s service territory, "will be treated as 'utilities' for the purpose of implementation of and compliance with the moratorium, except that those ESCOs will not place blocks on customer accounts."

"The ESCO must notify NFG which accounts are low-income and NFG would then be able to place a block on APP accounts to prevent those accounts from being enrolled with an ESCO. NFG and the ESCOs operating in its service territory under the ECB Model are afforded an additional 60 days to comply with the requirements of the July Order, as clarified in the present Order," the PSC said

The PSC also clarified that the moratorium does not apply to ESCO service under Department of Social Services (DSS) Aggregation Programs in NFGD’s service territory

The PSC also answered several questions and concerns raised by ESCOs concerning implementation, including ESCO arguments that the PSC's moratorium will inappropriately reveal a customer's APP status to the ESCO

"A customer’s APP status will not definitively be revealed to the ESCO as a result of implementing the moratorium. With respect to new enrollments, an enrollment of an APP will simply be rejected with a reason that does not identify the customer as APP," the PSC said. While the rejection code would vary by utility, the PSC said that the code would generally say that the enrollment was rejected because there is a block on the customer account. "A customer could have a block on their account for a number of reasons other than for APP status, including a desire to remain under full utility service permanently," the PSC said

Additionally, as utilities send lists of customers with blocks to ESCOs to de-enroll customers, the PSC said that this also will not reveal APP status.

"For existing ESCO customers, when the utility communicates to the ESCO what customers the ESCO is no longer eligible to serve, the identified group of customers will not only include APPs, but will include those utility customers who already had a placed a block on their account so as to avoid being enrolled with an ESCO. The Commission carefully weighed the privacy interests of APP customers against customer protections and the proper administration of assistance programs and found this solution to strike the most appropriate balance," the PSC said

The PSC noted that, "In its Petition, RESA states that it believes the utilities will send each individual ESCO a file that includes all ESCO customers who had blocks on their accounts and it would be the ESCO's responsibility to determine which of those customers are low-income. According to RESA this would include non-APP ESCO customers who have placed a block on their account in order to prevent being switched away from their existing ESCO."

"That is not the case," the PSC clarified. "The list of customers the ESCO is no longer eligible to serve will be comprised of APP customer accounts upon which the utility placed blocks on the account in compliance with the July Order, as well as customers who affirmatively placed blocks on their account in order to remain with the utility. The list will not include non-APP customers who voluntarily placed blocks on their account to prevent being switched away from their existing ESCO," the PSC said

"Nor will placing the block on the account on September 15, 2016 preclude the ESCO from serving the customer until the expiration of the existing agreement. The utility will not de-enroll the customer when it places the block on the account. The block will simply prevent the customer from re-enrolling or switching to another ESCO both during the existing contract and after its expiration. De-enrollment will be the responsibility of the ESCO once the agreement expires," the PSC said

RESA had raised concerns that timelines and requirements under the moratorium could conflict with the Uniform Business Practices. (UBPs).

RESA explained the UBP requires an ESCO dropping 5,000 or more accounts during a billing cycle to provide the utility with 60 days advance notice, while the moratorium requires ESCOs to execute drops upon receipt of the ineligible customer accounts, except for customers that the ESCO may continue to serve under existing agreements. Such drops will occur at the next meter read, which may be less than 60 days notice.

The PSC explained that, "because it is the utility identifying the accounts to be dropped, the utility will already be on notice. Therefore, we clarify that no additional notice will be required by the ESCO."

RESA also noted that, per the UBP, an ESCO is obligated to provide customers 15 days’ notice of a drop back to utility service. The PSC said that, "this requirement does not conflict with the requirements of the July Order, and ESCOs must still comply with this notice provision."

"In compliance with the July Order, utilities will place a block on APP accounts and notify the ESCO regarding those accounts the ESCO is no longer eligible to serve. The ESCO will then identify the expiration date of those accounts and continue service to those customers until the expiration of the agreement, at which time the ESCO will effectuate the drop back to utility service. Throughout these transitions, ESCOs will still be required to comply with the notice requirements of the UBP. Therefore, the ESCO will need to provide notice to the customer of the upcoming drop to utility service at least 15 days prior to the expiration of the agreement. Given the 30-day extension granted by the Secretary on August 15, 2016, the ESCO should have no trouble providing notice to customers whose agreements expire shortly after the ESCO is provided with the list of ineligible accounts, such as those on month-to-month contracts," the PSC said

Link to PSC order on clarification

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