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New York Adopts Guaranteed Savings Requirement As Part Of Allowing Low-Income Customers To Pledge Share of Bill Discount To Pay For Community Distributed Generation

Requires Other Customer Protections

PSC Orders Creation Of Loss Reserve Fund, Could Be Used To Offset CDG Developer Losses From Serving Low-Income Customers

July 13, 2018

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Reporting by Paul Ring • ring@energychoicematters.com

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The New York PSC has approved a bill discount pledge (BDP) program intended to increase the access of low-income customers to community distributed generation (CDG)

Under the bill discount pledge program, low-income customers will be able to use a share of their monthly affordability program bill discount towards the purchase of a CDG subscriptions. By doing so, the program would reduce or eliminate the need for low-income customers to pay CDG subscription fees out of pocket and is intended to incentivize CDG developers to serve low-income customers by addressing the concern that low-income customers may be unable to pay their subscription fees.

While foregoing the benefit of the discounted bill, the participating low-income customers would instead offset a portion of their monthly bills through CDG bill credits.

Under the PSC's order, the BDP program must ensure that annual participant CDG credits would more than offset the foregone bill discounts.

In adopting such a requirement, the PSC in its order noted that, "The Commission requires that ESCOs guarantee that low-income customers will pay no more than if they had purchased energy from the local utility; it is appropriate to require the same guarantee from CDG developers under the BDP program."

"CDG developers seeking to participate in the BDP program therefore must be able to demonstrate that they have mechanisms in place that are designed to guarantee that they are providing, on an annual basis, bill credits no less than the BDP amount pledged by the customer, and to promptly refund any difference. The Commission will hold each CDG developer individually responsible for ensuring such guarantee, rather than designating NYSERDA or another program administrator to do so," the PSC said in its order

"Such a demonstration shall be made in a petition to the Commission for authorization to serve low-income customers under the BDP program, similar to the authorization required for ESCOs to serve low-income customers. Similar to the showing required of ESCOs, such a petition must demonstrate: (a) an ability to calculate the difference between the Affordability program discounts pledged by the customer and the CDG credits received; (b) a willingness and ability to ensure that the customer will annually receive CDG credits and/or refunds totaling no less than the Affordability program discounts pledged; and (c) appropriate reporting and ability to verify compliance with these assurances," the PSC said in its order

In their petitions to serve low-income customers, the PSC ordered CDG developers shall include commitments to provide the protections required in the UBP-DERS, as well as other consumer protections specific to the BDP program as follows: (a) a certification that the CDG developer and its partner organizations will adhere to all applicable laws and regulations respecting sales and marketing, including any restrictions on door-to-door solicitation; (b) that no early termination fees shall apply to BDP program participants who leave the program due to termination of service for nonpayment, and (c) that affirmative customer consent is required for contract renewal at the end of the subscription term.

The PSC in its order noted that the utilities expressed concern that procedures would need to be established to protect against the disclosure of information without customer consent. "To address this concern, CDG developers shall be required to identify to the utility the subscribers it has enrolled as BDP participants and shall maintain agreements signed by the customer, for production to the utility, which shall include a provision that the utility is authorized to notify the CDG developer if the customer becomes ineligible for the Affordability program. Customer Authorization records shall also be maintained for at least two years after the customer terminates his or her agreement with the CDG developer. The utility will only make payments to CDG developers for customers enrolled in its Affordability program, for whom it has received copies of such authorization," the PSC said in its order

The PSC also directed the creation of a loss reserve fund. As proposed in a DPS Staff report, under the loss reserve program, public funds will be held in reserve to cover potential losses that CDG project owners and/or their lenders may incur, if low-income CDG subscribers default on or terminate CDG subscriptions at a higher rate than other customers.

As described in a Staff report, the loss reserve would mitigate perceived risks and reduce financing barriers for CDG developers seeking to serve low-income customers. This, in turn, would reduce the necessary subscriber credit requirements, and make it easier for low-income customers with no or low credit scores to purchase a CDG subscription.

"NYSERDA shall, through the Green Bank or other appropriate portfolio, create a loss reserve program for CDG projects serving low-income subscribers. NYSERDA shall engage with stakeholders in designing the program. NYSERDA is directed to file a report on the status of loss reserve program development within 6 months of this Order. Regular reporting on participation in the loss reserve program, once it is operational, shall be incorporated into the appropriate existing NYSERDA reporting activities," the PSC said in its order

The loss reserve will further ensure that credit quality does not serve as a barrier to CDG membership, the PSC said in its order

A precise amount of funding required for such a loss reserve was not determined at this time

Cases 15-E-0751, 15-E-0082

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