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Federal Court Grants Temporary Stay Of New York PSC December 2016 Order Prohibiting ESCO Service To Low-Income Customers

October 24, 2017

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Copyright 2010-17
Reporting by Paul Ring •

The United States Court of Appeals for the Second Circuit has issued an order temporarily staying enforcement of the New York PSC's December 16, 2016, order which generally prohibits ESCOs from serving assistance program participant (APP) customers (except for any subsequently granted waiver)

The federal appeals court issued the temporary stay as it considers an appeal of a federal district court order which had denied a stay and injunction in a lawsuit brought by an anonymous APP ESCO customer (Jane Doe) against the PSC, with such plaintiff alleging that the PSC's APP orders, "deny the members of the class equal protection of the laws and interfere with their right to contract, invade their right of privacy [by disclosing their APP status], and deprive them of due process of law."

See our prior story for more details on the original complaint filed by Jane Doe, which is seeking class action status

The Jane Doe plaintiffs had sought from a federal district court a Temporary Restraining Order and a Preliminary Injunction of the implementation of the PSC's December 16, 2016 APP Order, as plaintiffs alleged that such APP order requires, "(1) utilities to share with all ESCOs confidential, private information about the financial status of millions of low-income customers (2) ESCOs to view this confidential financial status information and, (3) based upon the confidential information, forcibly de-enroll all low-income customers from their commodity contracts in violation of their constitutional rights."

The plaintiffs, in an October 6 brief, had noted that, "The implementation dates for these acts have been delayed several times, but the ESCOs have been ordered to notify customers they are severing their variable rate contracts with low-income customers by October 22, 2017. To-date many ESCOs have declined to open the lists sent by the utilities, but in the next two weeks they must open the lists to comply with the PSC’s order."

In such brief, the attorney for the plaintiff, William J. Dreyer, wrote: "The PSC’s Order actually does the opposite of 'protecting' low-income customers: It eliminates their right to choose an energy provider and product, thereby making it more difficult for low-income customers to budget -- as the monopoly utilities offer no fixed-rate pricing -- and will actually increase the rates many low-income customers pay for electric and gas service. In other words, many of these consumers -- including Plaintiff -- will be forced to pay more to the monopoly utilities than they have been paying to their ESCO provider of choice."

"Plaintiffs therefore seek the following relief: (1) A Temporary Restraining Order and Preliminary Injunction staying the Implementation of the December PSC Low-Income Order until the resolution of this case on the merits; (2) Enjoining ESCOs from opening or using the confidential data sent to them by utilities in violation of state and federal law," the plaintiffs moved

In a brief opposing the sought stay, the PSC had noted that the, "Albany County Supreme Court has upheld the rationality of the Commission decision to ensure that state and federal monies intended to preserve utility service for low-income customers are used to pay for the cheapest possible service. Moreover, the PSC used its authority to set 'just and reasonable' rates for public utilities to provide for competitive entry onto utility systems by gas and electric providers in order to lower prices, not raise them."

"Plaintiff claims that the Commission has unconstitutionally discriminated against low-income residents, insofar as it has protected such customers against ESCO overcharges. The Johnson Act, 28 USC § 1342, precludes, however, federal constitutional challenges to the PSC use of ratemaking authority," the PSC had said in its brief

The PSC in its brief further noted that the Jane Doe plaintiff has stated that she has a "fixed-price supply agreement."

"The PSC only required cancellation of at will, month-to-month variable rate contracts. As such, there is no basis for a temporary restraining order on her contract," the PSC said in its brief

A federal district court rejected a temporary restraining order sought by the plaintiffs

The federal district court had ruled on October 17, "After hearing oral argument on the motion for a temporary restraining and preliminary injunction, it was found that there is no basis for a temporary restraining order. Plaintiff has failed to show immediate irreparable harm that warrants equitable relief and therefore there is no need to consider the merits of plaintiff's claims for purposes of a temporary restraining order."

The plaintiffs appealed the district court's ruling to the United States Court of Appeals for the Second Circuit

Addressing the plaintiffs' (Appellant) motion, the federal Second Circuit appeals court ruled on October 20 as follows:

"Appellant moves the Court to stay the Appellees’ Public Service Commission Order dated December 16, 2016, and for an order enjoining Appellees, and those acting in concert with Appellees, from taking actions to implement the order, pending appeal. Appellants also move the Court for an emergency stay of the district court’s October 17, 2017 order, and for an order enjoining Appellees, and those acting in concert with Appellees, from taking any action to implement the Public Service Commission Order, pending resolution of the motion for stay and injunction pending appeal. Appellees oppose the emergency motion and the motion for stay and injunction pending appeal.

"IT IS HEREBY ORDERED that the motion for stay and injunction pending appeal is REFERRED to the next available three-judge panel. IT IS FURTHER ORDERED that a temporary stay is GRANTED pending determination of the motion by a three-judge panel."

As noted, the granted stay is temporary while the federal appeals court fully hears the plaintiffs' motion for a stay and injunction on appeal

In response to the temporary stay, Craig Goodman, President of the National Energy Marketers Association, released the following statement: "We applaud the Second Circuit for stopping the PSC from discriminating against low-income New Yorkers until the facts can be properly litigated before a federal three-judge panel. As we have demonstrated in our own action before the courts, the PSC has undertaken a policy agenda that is not supported by the facts. The PSC will now be forced to explain its baseless claims that ESCOs overcharge, and defend its outrageous decision to eliminate consumer energy choice, which was made without public input or legislative oversight. This temporary stay is an important victory for the low-income customers the PSC is supposedly trying to protect."

In response to the original Jane Doe complaint filed in August, the PSC's press office at such time had 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."

Case 17-cv-936 (district); Docket No. 17-3361 (appeal)

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