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NY Appellate Division Affirms PSC Jurisdiction Over ESCO Pricing

Statutory Authority Allows PSC To Impose "Limitations" On ESCO Rates, Court Says

July 27, 2017

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

In addressing appeals from the Supreme Court for the County of Albany concerning that lower court's decision concerning the New York PSC's mass market "reset" order, which had banned ESCO service to all mass market customers except for two compliant products, an Appellate Division court agreed with the lower court that the PSC has authority over ESCO prices

As previously reported, the lower court, in addressing the reset order, vacated several ordering clauses of the reset order on procedural grounds, but in doing so it found that the PSC had jurisdiction over ESCO rates

The Appellate Division agreed with this conclusion in a decision issued today

"We do find ... that the PSC's broad statutory jurisdiction and authority over the sale of gas and electricity authorized it to impose the limitations set forth in the Reset Order," the Appellate Division said

"Pursuant to Public Service Law § 5, '[t]he jurisdiction, supervision, powers and duties of the [PSC] shall extend . . . [t]o the manufacture, conveying, transportation, sale or distribution of gas . . . and electricity . . . to gas plants and to electric plants and to the persons or corporations owning, leasing or operating the same' (Public Service Law § 5 [1] [b] [emphasis by Appellate Division]). The emphasized language speaks to general authority over the sale of gas and electricity, followed by the specific extension of the PSC's jurisdiction over gas and electric plants. Importantly, there is no dispute that the PSC is authorized to set 'just and reasonable' tariff rates for gas and electric corporations pursuant to Public Service Law articles 1 and 4 (Public Service Law § 66 [5]; see Public Service Law § 5 [1] [b]). In fact, it is the PSC's broad jurisdiction that enabled it to allow ESCOs access to utility systems in the first place. The PSC essentially maintains that this same authority allows it to impose limitations on ESCO rates as a condition to continued access. We agree," the Appellate Division said

The PSC's reset order limited ESCOs' service to mass market customers to: (1) where the contract guarantees that the customer will pay no more than were the customer a full-service customer of the utility; or (2) a contract for an electricity product derived from at least 30% renewable sources

"This decision falls within the PSC's broad authority to assure that 'just and reasonable rates' are charged for gas and electric sold to the consumer, consistent with its authority over utilities," the Appellate Division said of the reset order

"Accordingly, we agree with Supreme Court that the PSC had jurisdiction to impose the rate limitations set forth in the Reset Order," the Appellate Division said of the reset order

The Appellate Division did find that ESCOs are not, "a gas or electric corporation," as defined by statute, for which the PSC has traditional "rate-making" authority. However, for the reasons stated above, the Appellate Division found that the PSC still has jurisdiction over ESCO pricing and it is within the PSC's powers to adopt "limitations" on ESCO "rates."

The Appellate Division did affirm the lower court's vacating of Ordering Clauses #1-3 of the reset order (which had generally implemented the ban on mass market service but for the two compliant products), for what the lower court had previously found was lack of proper notice for the original reset order. The PSC instituted the mass market review process, including the evidentiary hearing track, to cure this prior finding.

However, the Appellate Division said that the Supreme Court erred, "to the extent that it found that ESCOs have a property interest in continued access to utility systems."

Link to Appellate Division order

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