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Updated: Low-Income ESCO Customer Files Lawsuit In Federal Court Against New York PSC Ban On ESCO Service To APP Customers

August 24, 2017

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

Update: 4:00pm ET

The PSC's press office issued the following statement in response to the complaint: "During a recent 30-month period, energy service companies (ESCOs) overcharged low-income New Yorkers for gas and electricity by $96 million. The Commission’s order not only protects low-income customers but also the millions of taxpayers and ratepayers of New York who subsidize discounts for low-income New Yorkers."

Earlier:

A lawsuit, seeking class-action status, has been filed in federal court by a low-income ESCO customer against the New York State Public Service Commission concerning the PSC's order prohibiting ESCOs from serving assistance program participant (APP) customers

The suit was filed on behalf of an anonymous Syracuse-area woman and a class of similarly situated low-income New Yorkers. The suit states that the Plaintiff is eligible to receive federal low-income assistance to help pay for their utility bills under the Home Energy Assistance Program, and is an APP customer

"Plaintiff, Jane Doe, on behalf of herself and all others similarly situated, brings this Complaint, by and through her attorneys, for declaratory judgment and injunctive relief to enjoin Defendant, the New York State Public Service Commission (hereinafter 'PSC'), from enforcing certain orders issued by the PSC, which deny low-income individuals in the State of New York the right to contract with independent energy service companies ('ESCOs') for the provision of gas and electric services in the State of New York -- a right that all other New Yorkers enjoy. Such orders deny the members of the class equal protection of the laws and interfere with their right to contract, invade their right of privacy, and deprive them of due process of law," the complaint states

The suit notes that pursuant to PSC orders, including the December 16, 2016 order, "low-income customers can no longer elect to sign up for fixed-rate agreements or agreements for the purchase of renewable 'green' energy. Low-income customers will be forced to purchase energy from a single local utility servicing their geographic region, subject to variable-rate pricing that is impossible to forecast."

"The December 16, 2016, Order not only prohibits ESCOs from enrolling any low-income customers, but orders ESCOs to terminate their relationships with current customers whose income is low. For accounts that have a definitive term, the Order requires that the relationship forcibly be terminated when the term expires. For ongoing agreements that do not expire that adjust rates on a monthly basis (as the utilities do), which, upon information and belief, are the vast majority of such ESCO agreements, the Order requires ESCOs to terminate each customer within thirty (30) days of receiving notice that the customers are being 'de-enrolled,'" the suit states

The suit notes that neither the Plaintiff nor any other Class Member is a party to various state court proceedings concerning the PSC's APP order

Plaintiff Jane Doe has been a customer of an ESCO, BlueRock Energy, Inc., for two years. She receives both gas and electric supply from BlueRock. "She chose BlueRock, in part, because she wanted a fixed-rate energy bill so that she could manage her finances. Under her gas contracts with BlueRock, she has reduced her energy supply costs by approximately 12% during the first half of 2017 alone. These savings are in addition to the peace of mind she gains under a fixed-price supply agreement, which she chose and which the monopoly utilities do not offer," the suit states

The suit states: "Plaintiff Jane Doe was unaware of the PSC's unilateral decision to terminate her service from BlueRock until she received a letter on July 28, 2017, from National Grid (the 'Forced Termination Letter') ... On information and belief, the PSC required National Grid to send the Forced Termination Letter pursuant to the PSC's December 16, 2016 Order. Upon receiving the Forced Termination Letter, Plaintiff Jane Doe complained to BlueRock about the termination of her account and expressed her desire to continue her relationship as a customer of BlueRock's. She was advised by BlueRock that BlueRock was not voluntarily dropping her as a customer, but that the PSC was forcibly de-enrolling her pursuant to its 'Low-Income Order.'"

The suit alleges that one justification for the PSC's precipitous action, "was a conclusion, unsupported by any evidence, that 'unsuspecting retail customers, and particularly APPs' were overpaying 'unwittingly;' that is, that the PSC decided that low-income customers did not have the ability to think for themselves or exercise their independent judgment to choose the energy providers that best serves their needs."

"The December 16,2016, Order is apparently based on the assumption that, simply because a customer has a low net worth, the customer is not able to decide for himself or herself the best or most economical way to receive utility services. It forces such customers to purchase energy only from the monopoly utility in their community and deprives such customers of the right to choose for themselves their own products and provider-in clear violation of the United States and New York State Constitutions. It also eliminates those customers' abilities to lock in fixed rates for energy, support renewable energy products for their homes or to obtain loyalty discounts, reward points, and gift cards offered through some ESCO programs," the complaint alleges

The suit continues: "The PSC maintains a website that allows New York customers to compare and contrast the offering of different ESCOs against the local utility. This website is called 'Power to Choose,' and can be accessed on the internet at www.newyorkpowertocboose.com. As of August 17, 2017, the website showed that a customer in Syracuse, New York (zip code 13208), for example, could have entered into variable-rate contracts for 3.5¢ per kilowatt hour and fixed-rate contracts with different ESCOs for under 5¢ per kilowatt hour. That same website also showed that the variable rate charged by the local utility (National Grid) was more than 5¢ per kilowatt hour and that the local utility's rate had increased more than 11% in the last two months alone. Customers cannot buy fixed prices from the local utility (National Grid). Thus, customers who are given the 'Power to Choose' can save a substantial amount of money and eliminate their exposure to volatile commodity prices, thereby avoiding fluctuation in their energy supply cost. Such cost savings and budgeting certainty and predictability are particularly important for low-income and fixed-income individuals."

The suit alleges that the New York Office of Temporary and Disability Assistance's model vendor agreement for suppliers of home heating fuels requires that, "Households receiving assistance from HEAP will not be treated adversely because of such assistance under applicable provisions of State law and public regulatory requirements."

The suit alleges, "The December 16, 2016, Order violates this commitment that HEAP participants 'will not be treated adversely because of such assistance' by depriving only low-income customers of the freedom to choose their preferred energy provider, including to benefit from long-term fixed-rate plans or green alternatives that only ESCOs offer."

The suit alleges that, "Defendants' conduct violates Plaintiffs and the Class Members' rights under the Equal Protection Clause of the United States Constitution, and their rights under 42 U.S.C. § 1983."

The suit alleges that, "Defendants' conduct violates the Plaintiffs and the Class Members' rights to equal protection pursuant to Article I, Section 11 of the New York State Constitution."

The suit alleges that, "Defendants' conduct violates Plaintiffs and the Class Members' rights under the Contracts Clause contained in Article I, Section 10, Clause 1 of the United States Constitution, and their rights under 42 U.S.C. § 1983."

The suit alleges that, "The Order directs the cancellation of many existing customers' contracts where those contracts provide for variable pricing: '[W]ith respect to customers on variable rate, month-to-month contracts, the expiration of the agreement is at the end of the current billing period.' Many variable rate contracts are long-term contracts, in which the parties agreed that the ESCO would reset the rate every month. The contracts have an indefinite term and expire only upon the ESCO or the customer's termination of the contract. The PSC recognizes that variable-rate contracts are continuing contracts by not requiring compliance with its enrollment procedures under the Uniform Business Practices. Yet the PSC has directed all ESCOs to terminate such contracts."

The suit alleges that, "Defendants' conduct violates the Takings Clause of Article I, Section 7 of the New York Constitution."

The suit alleges that, "Defendants' conduct violates the New York State General Business Law § 349-d(6) which prohibits any material change to the terms or the duration of any contract for the provision of energy services by an ESCO 'without the express consent of the customer.'"

The suit alleges, "The December 16, 2016, Order also substantially invades the privacy rights of such low-income customers under both Federal and State law because it requires the utilities to disclose to ESCOs the income levels of hundreds of thousands of individuals (who are HEAP and subsidy recipients) so that the ESCOs will terminate those accounts. ESCOs in turn are required to further violate those customers' privacy rights by sharing that information with the many employees and contractors who are involved with enrolling customers in ESCO products."

The suit alleges that, "Defendants' conduct violates Plaintiff's and the Class Members' rights to privacy as embodied in the United States Constitution; their rights under 42 U.S.C. § 1983; and their statutory privacy rights under HEAP and 45 CFR § 205.50, as set forth above."

The suit seeks to preliminarily and permanently enjoin Defendants, their staff and those acting in concert with them from enforcing or seeking to enforce or implementing any of the PSC orders relating to termination of low-income customers including, but not limited to, the PSC's December 16, 2016 Order.

The suit seeks an order declaring that the orders of the PSC including the December 16, 2016 Order are void, unenforceable and violative of Plaintiff's and the Class Members' constitutional and statutory rights.

The suit was filed in the United States District Court for the Northern District Of New York

Link to complaint

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