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Consumer Advocates Oppose NY ESCOs' Sought Waivers To Serve Low-Income Customers
In separately filed comments, New York's Utility Intervention Unit, and the state's Attorney General, opposed requested waivers filed with the PSC by several ESCOs who are seeking to continue to serve low-income customers.
The PSC previously banned ESCOs from serving assistance program participant (APP) customers, absent a waiver for guaranteed savings products. The PSC has tolled implementation of such order until at least May 26, pending court action on an appeal.
Among several ESCOs which had sought waivers to serve low-income customers with a guaranteed savings products were Ambit New York, LLC, National Fuel Resources, Inc., and Zone One Energy LLC.
Speaking generally about the waiver mechanism, UIU said that the PSC should require ESCO-waiver recipients to complete a reconciliation process and on-bill price comparison for APP customers, on, at least, a quarterly basis.
"As UIU has stated in prior comments when discussing budget billing, low-income customers are likely to have limited access to capital resources. Therefore, waiting an entire year to receive refunds from overcharges could lead to a customer falling into the arrears process," UIU said
"UIU recommends that utilities, whom in most cases serve as the billing agent for ESCOs, explore with ESCOs a cost-effective method of providing a quarterly reconciliation process for low-income customers. Some utilities offer quarterly reports for budget billing customers, thus they have an understanding of the administrative billing requirements. The additional information needed, the ESCO historic prices, are already required to be filed with the Commission on a quarterly basis," UIU said
UIU further said that the Commission should adopt a uniform methodology for the ESCO-utility price comparison required for guaranteed savings products, "to ensure all customers have adequate protection from potential overcharges."
"The petitions submitted by Ambit and Zone One Energy allege that they have successfully offered customers guaranteed savings products but without an understanding of the methodology used to compute 'savings' from the utility price, it is impossible to confirm if this assertion is correct," UIU said
Furthermore, UIU alleged that Ambit's terms of service includes in the calculation of the guaranteed savings any bonuses paid to customers for customer referrals, which UIU said should not be counted as part of the savings.
"Allowing the Company to include these incentives as part of their customer price savings guarantee calculation will lessen the Company motivation to ensure their customers achieve real commodity price savings," UIU said
The AG alleged that the petitions for the waivers lacked details to evaluate the proposed guaranteed savings programs (Note: as NFRI's petition was redacted in its entirety, both UIU and the AG refrained from making specific comments with respect to NFRI's petition)
"The petitions fail to satisfy the Commission’s requirements to the extent that they fail to adequately demonstrate the ability to meet the three standards outlined. Ambit and Zone One Energy provide broad and vague assertions that they will meet the stated criteria, without providing any detailed substantiation for those claims. Unless and until ESCOs can make the showing required by the Commission’s Order, these ESCOs should be prohibited from serving low-income customers," the AG said
"[T]he petitions offer no meaningful explanation of how the sum that consumers would have paid to the utility is calculated," the AG said
"Second, the petitions are deficient because they do not offer any reporting procedures or other means to verify that their plans actually provide guaranteed savings to consumers compared to what they would have paid as full-service utility customers," the AG said
The UIU further said that APP customers should be granted enhanced customer protections if ESCOs are permitted to continue to serve them under the waiver, such as (1) the ability to opt-out of a non-compliant contract without paying a termination fee; (2) a requirement that ESCO’s post performance bonds (to ensure the ESCO has the funds to provide customer refunds as necessary for any overcharges); and, (3) additional ESCO business practice disclosures including past investigations and complaints in other states.
With respect to Ambit Energy specifically, the AG urged the PSC to exercise caution, stating, "the NYAG is conducting an ongoing investigation into Ambit’s marketing practices with respect to residential consumers, including whether Ambit’s guaranteed savings are illusory."
The AG noted that, in an action announced in 2015, Ambit previously issued over $950,000 in refunds to 1,566 consumers as a result of an investigation by the PSC, prompted by customer complaints about rolling over from a guaranteed savings plan to a different variable rate plan.
An Ambit Energy representative issued the following statement to EnergyChoiceMatters.com:
"The PSC made no finding that Ambit violated the Uniform Business Practices or that Ambit’s customer renewal notices were inadequate. As a result of some customers indicating they had never received a renewal notice letter, Ambit, in cooperation with the PSC, issued voluntary refunds as a gesture of goodwill to certain customers who had filed complaints with the PSC. Ambit is fully cooperating with the New York Attorney General’s Office in its request for information."
Zone One Energy issued the following statement concerning the UIU's comments:
"Zone One Energy fully supports the PSC's efforts to ensure that those ESCOs that are granted a waiver from the Low Income Moratorium are indeed offering savings, and that amount of savings realized is available on demand to their customers via a web portal. Additionally, as noted in our waiver, we are eager to work with utilities and government agencies to set up a mechanism to provide independent monitoring and verification of these savings.
"Zone One Energy’s waiver also provides a clear billing methodology, whereby the rates that Zone One Energy’s customers will pay is based on applying a discount to what the customer would have paid had it purchased its electric supply under bundled service from the utility. In order to accomplish this, Zone One Energy will utilize the exact billing methodology and rate tables that the utility uses in order to calculate its supply charge, and then provide the contracted discount off this calculated rate in order to provide savings to the customer.
"Zone One Energy feels strongly that there should be options available to the low income community to purchase their electric supply on a guaranteed savings basis. Zone One Energy is confident that it meets the requirements to be granted a waiver from the Low Income Moratorium, and as such, will work diligently to address any concerns that the Commission has. "
Zone One Energy issued the following statement concerning the AG's comments:
"Zone One Energy is confident that it addressed several of the points addressed in the Attorney General’s statement concerning Zone One Energy’s application for a waiver from the Low Income Moratorium.
"We agree with the Attorney General’s office that it is critical that ESCOs offer a 'meaningful explanation of how the sum that consumers would have paid to the utility is calculated'. As stated in Zone One Energy’s waiver, 'The savings that Zone One Energy provides is based on a comparison of our after-tax supply charges with what the customer would have paid for the supply portion of its electric bill had the same quantity of electricity been provided from the utility. This comparative supply cost is calculated using all components of the utility’s rate structure that would otherwise be in effect for the customer’s account, including monthly adjustments and applicable taxes.'
"As noted in the letter from the NY Attorney General’s office, Zone One Energy confirms its position that independent oversight of ESCO billing would be beneficial to the marketplace. At the same time, Zone One Energy’s petition is very clear that 'we provide our customers with a web-portal where they can track usage, billing and savings metrics', as required by the PSC.
"Zone One Energy looks forward to having an opportunity to discuss directly with the Attorney General’s office the concerns that were raised in order to ensure that all conditions associated with the granting of a waiver are satisfied."
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Seek Quarterly Reconciliation of Any Guaranteed Savings Program
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March 29, 2017
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Reporting by Paul Ring • ring@energychoicematters.com
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