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Non-party ESCOs Seek Withdrawal of NY PSC Subpoenas, Say Subpoenas Deficient, Not Authorized By Law

Info Sought Under Subpoenas Revealed; Staff Asks What Impact Elimination of POR, UCB Would Have On ESCOs

June 14, 2017

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Reporting by Paul Ring • ring@energychoicematters.com

Counsel for three ESCOs filed separate motions for the New York PSC to withdraw subpoena duces tecum issued to the ESCOs, which are not parties to the PSC's mass market evidentiary review proceeding, as counsel for the ESCOs said that the subpoenas were deficient, and the PSC lacked authority to issue the subpoenas.

Similar, but separate, motions were filed by counsel for Family Energy Inc., Atlantic Energy LLC, and Major Energy Services LLC and Major Energy Electric Services LLC. All three motions used substantially similar language; the motion filed on behalf of Family Energy is used below as an illustrative example.

"While the subpoena is dated May 26, 2017, Family Energy first received notice of the subpoena via an e-mail from the Department of Public Service Staff, dated June 8, 2017, which attached a 'courtesy copy' of the subpoena. The e-mail stated that service was completed by delivery to the Secretary of State on May 26, 2017, but Family Energy has yet to actually receive a subpoena. The attachment itself directs Family Energy to provide responses by June 16, 2017. Given the above-noted circumstances, Family Energy lacks the necessary time to review the subpoenas with its counsel, or to prepare the purportedly required response. In fact, Family Energy cannot even confirm that service was properly complete," counsel for Family Energy said in a filing

"Moreover, the Commission, and by extension its ALJs, lacks jurisdiction to issue subpoenas requiring ESCOs to submit their confidential and proprietary business information to the agency under PSL §§ 19 and 66. The evidentiary proceeding in which the subpoena was issued was not commenced by the Commission or required by law as provided by PSL §§ 11 and 16 NYCRR § 4.1. Nor was the Secretary or the ALJ delegated authority by the Commission to commence the ESCO evidentiary hearing or to issue subpoenas in such hearing pursuant to PSL §§ 8, 11 or 19. In addition, the substantive request for documents and information lacks a legitimate factual basis, imposes an undue burden to meet overbroad demands, and seeks highly confidential proprietary business information, including trade secrets, that cannot be used in the proceeding under the governing protective order (which only applies to parties)," counsel for Family Energy said in a filing

"Furthermore, the subpoena is procedurally defective under both the Commission’s rules and the CPLR which require a factual basis for the request pursuant to 16 NYCRR § 3.4(b) ('set[ ] forth . . . the reasons they are reasonably related to the subject of the proceeding') and CPLR § 3101(a)(4) ('the circumstances or reasons such disclosure is sought or required'). In addition, contrary to the ex parte manner in which the subpoena was procured and issued, 16 NYCRR § 3.4(a) requires that '[a] copy of any request for a subpoena duces tecum shall be served on the party alleged to possess the document requested.' No such pre-issuance copy, or other due process, was provided to Family Energy," counsel for Family Energy said in a filing

"Finally, the subpoena is improper to the extent it attempts to incorporate interrogatories into a subpoena duces tecum -- a hybrid device that does not exist in the Civil Practice Law and Rules. Nor is an ALJ authorized to issue such a device under the PSL or the agency’s regulations. Furthermore, requiring non-parties who have chosen not to participate in the evidentiary proceeding to put their confidential and trade secret information into the public record while the entire proceeding may still be terminated pending the results of an interlocutory appeal and the pending civil appeals of the Reset Order is highly prejudicial and wasteful," counsel for Family Energy said in a filing

"For these reasons, among others, and as prescribed by Section 2304 of the New York Civil Practice Law and Rules, we respectfully request that you immediately withdraw the above-mentioned subpoena," counsel for Family Energy said in a filing

In their filings, the ESCOs also included copies of the subpoenas

Among other things, the subpoenas sought the following:

• Provide separate audited financial statements at the New York State Energy Service Company (ESCO) business level for the years 2011 through 2016. Include an Income Statement, Balance Sheet, and Statement of Cash flows and related disclosure notes

• Provide the following information on a calendar basis for the period 2011 through 2016 for your New York operations:

    a. Revenues earned from the sales of electricity.

    b. Revenues earned from the sales of natural gas.

    c. Cost of electricity sold.

    d. Cost of natural gas sold.

    e. Return to equity earned on sales of electricity. Show both the net income and equity capital components of the calculation and how these amounts were derived from the accounting records of the Energy Service Company.

    f. Return to equity earned on sales of natural gas. Show both the net income and equity capital components of the calculation and how these amounts were derived from the accounting records of the Energy Service Company.

• For each month of each calendar year 2011 through 2016, provide the following information, broken out by each specific product:

    a. Number of Customers

    b. Aggregate Amount Billed to Utility

    c. Aggregate Credit Amount Issued to all Customers

    d. Cost of Value Added Benefits

Notably, subpoenas also asked:

• What would be the impact to your business if either or both of the following utility services were no longer available and each ESCO was responsible for billing and collection of its own accounts receivables?

    a. Consolidated utility billing, and

    b. Purchase of receivables.

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