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N.Y. ALJs Deny Motions To Quash Subpoenas To Non-Party ESCOs, Issues Clarification

July 19, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The presiding ALJs have rejected all motions to quash (and similarly styled relief) subpoenas, sought by Department of Public Service Staff, served on ESCOs who are not parties to the New York PSC's evidentiary review of the retail energy mass market.

Generally, the subpoenas seek information related to the non-party ESCOs’ financial data, including filed tax returns; the types of energy and value-added products offered by the ESCO; customer data, including the types of customers served and the cost of credits and value-added services provided to customers; the volume of energy sold, by type, and revenues earned from each; customer satisfaction surveys, with results; and any comparison shopping tools the ESCO provides to its customers.

The ALJs declined to modify or withdraw the subpoenas, but offered a clarification regarding what is required of the ESCOs in responding to the subpoenas.

"As an initial matter, to the extent that any non-party ESCO asserts that the subpoena issued to it must be withdrawn or modified because (a) the ESCO does not serve customers in New York; (b) the ESCO already has provided the requested information to Staff in response to previous information requests (IRs); (c) the ESCO does not possess any documents that are responsive to a given request, or (d) the number of documents that are responsive is voluminous, we do not find that these situations require us to withdraw or modify any subpoena. Rather, the ESCO’s response to the subpoena should indicate that the requested information previously was provided or that the ESCO does not believe that it possesses records or documents that are responsive to the subpoena," the ALJs said

"Moreover, the fact that an ESCO may have to provide an abundance of documents in response to a subpoena, alone, does not render the subpoena invalid or improper. No ESCO has provided us with any information from which we can evaluate with any specificity the severity of the alleged burden responding to the subpoenas presents. Further, we note that we granted extensions of time for responses to all the non-party ESCOs that objected to the subpoenas and requested a stay pending resolution of their requests. This extension provided the ESCOs with nearly five additional weeks to compile documents responsive to the requests. Under the circumstances, we do not believe that providing responses to the subpoenas places an undue burden upon the ESCOs." the ALJs said

"With respect to the arguments related to or based upon the pending interlocutory appeals, including the propriety of the December 2016 Notice and/or the validity of the ESCO proceedings, the Commission’s authority over ESCOs, and the scope of discovery in the ESCO proceedings, we already have ruled upon these issues in the ESCO proceedings and decline to revisit them here. Suffice it to say that we find these arguments to be unavailing and not warranting our withdrawal or modification of the subpoenas," the ALJs said

"We are not persuaded by claims that the subpoenas are invalid because Staff did not serve a copy of the request for the subpoenas upon the subpoenaed ESCOs prior to our signing them. The Commission’s rules of procedure state that '[a] copy of any request for a subpoena duces tecum shall be served on the party alleged to possess the documents requested.' However, we do not read this provision as requiring Staff to serve a copy of the subpoena request upon the ESCOs prior to presenting the subpoena to us for our signature. Moreover, to the extent that Staff did not serve a copy of the request upon an ESCO, we do not believe that such procedural irregularity renders the subpoenas fatally defective. The purpose of requiring service of the request in addition to the subpoena itself appears to be to give the subpoenaed entity notice of the basis upon which the subpoena is sought, as well as the reason the information requested therein is required, and such notice has been amply provided here," the ALJs said

"The ESCO proceedings have been ongoing for many years and the Commission’s finding that the retail access market is not functioning well for mass-market customers has been widely disseminated ... ESCOs specifically were made aware that any ESCO that chose not to participate in the proceedings as a party – and therefore avoid being subject to the Commission’s discovery rules – nevertheless could be subject to the Commission’s subpoena power," the ALJs said

"Accordingly, we believe that over the course of the ESCO proceedings, the non-party ESCOs have been provided with ample notice of the type of information that the Commission is interested in reviewing," the ALJs said

"However, in an effort to avoid further dispute, to the extent that Staff has not yet served a copy of the subpoena requests on the non-party ESCOs, it must serve such within five days of the date of this determination. Because this service obligation is set forth in Rule 3.4(a), rather than in the CPLR, it can be met by email delivery consistent with the Commission’s procedural rules and need not be conducted through the formal process applicable to service of the subpoenas themselves," the ALJs directed

"Nor are we persuaded by arguments that Staff did not sufficiently articulate how the information it requests is relevant or necessary to the development of a record in the ESCO proceedings ... it is our opinion that Staff has adequately addressed why the information sought via the subpoenas is material and necessary to the development of the record in the ESCO proceedings. We believe that each of the document requests is related to an area of concern or issue for exploration identified in the December 2016 Notice. Moreover, we already have ruled in the ESCO proceedings that issues related to ESCO profitability and the ESCO market serving large commercial and industrial customers are proper areas of inquiry, and we are equally convinced that the information from non-parties is not only reasonably related but also material and necessary to the issues being explored in the ESCO proceedings," the ALJs said

"Many ESCOs objected to the subpoenas due to the wording of certain of the requests, which some assert are improperly styled as interrogatories. We agree that various document requests, particularly numbers 5, 9c, 11 and 13, are worded in a way that could lead one to believe that Staff expected the ESCOs to create or provide a narrative response. We also agree that the ESCOs are not required to create a document to respond to the subpoenas if responsive documents do not already exist. However, Staff explained in its responsive papers that 'each request posed in the subpoenas relates to a document or record,'" the ALJs said

"Accordingly, we clarify that ESCOs need not create any documents to comply with the subpoena. Rather, the ESCOs should review their existing documents and determine if any are responsive to the questions posed by Staff. If no responsive documents exist, then the ESCO should so indicate in its response," the ALJs clarified

"[W]e clarify that the ESCOs are not required to create documents responsive to Staff’s requests if responsive documents do not exist," the ALJs said

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