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ESCOs Say New York Utilities' Sought Declaratory Ruling Allowing Suspension Of Service To ESCOs An Impermissible Modification To UBP Absent SAPA Notice

December 24, 2018

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

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Various ESCOs filed comments with the New York PSC opposing a petition from the New York Joint Utilities, who have sought an order from the PSC confirming their ability to terminate ESCOs' access to their systems for not signing a new Data Security Agreement

As first reported by EnergyChoiceMatters.com, the Joint Utilities have petitioned the Commission to issue a declaratory ruling confirming the Joint Utilities' right under the UBP to discontinue an Energy Service Company's (ESCO) access to Utilities' various systems, in their relevant retail access program, if that ESCO fails to meet minimum data security standards, including the execution of a Data Security Agreement (DSA) in accordance with UBP provisions governing "Eligibility Requirements" for ESCOs. The Joint Utilities also seek a declaration that they hold authority to initiate the discontinuance process unilaterally and without intervention of the Commission.

In comments filed with the New York PSC, the Retail Energy Supply Association said, "the Commission should deny the declaratory ruling sought by the Joint Petitioners because not doing so would effectively constitute an amendment to the Uniform Business Practices ('UBP') that has not been subjected to the rulemaking requirements of the State Administrative Procedure Act ('SAPA'). Additionally, the Commission should reject the Joint Petitioners' claim that they may initiate a discontinuance without Commission intervention, as such intervention is clearly required under the UBP and to suggest otherwise would set a dangerous precedent."

RESA said in its comments that, "The Petition is effectively seeking to promulgate a rule subject to SAPA because it seeks to amend the UBP by making acceptance and compliance with the DSA and SA mandatory regardless of whether the failure to sign the DSA and complete the SA [Self-Attestation document] actually creates any material risk to any Joint Utilities' system. Further, if the Commission were to grant the Joint Utilities' Petition, it would provide the Joint Utilities with direct authority to discontinue ESCO service if an ESCO fails to execute the DSA and SA. This would expand the authority of the Joint Utilities under Section 2.F of the UBP, which presently requires Commission intervention in the discontinuance of ESCO services ... Accordingly, the granting of the Joint Utilities' Petition would approve the terms of the DSA and SA and effectively alter the UBP -- changes which amount to a rule subject to rulemaking procedures prescribed under SAPA."

RESA said in its comments that the Utilities' claim that they may terminate access to ESCOs without PSC intervention, "completely ignores the balance of Section 2, which makes clear the Commission oversight is to be present when initiating a discontinuance."

"First and foremost, a discontinuance requires a case-specific finding under Section 2.F.1 that there is cause to discontinue an ESCO. It goes without saying that the Commission would need to be involved in establishing that sufficient cause exists to discontinue an ESCO. Meanwhile, Sections 2.F.4 and 2.F.5 explicitly indicate that the Commission is to play an active role in any discontinuance. Section 2.F.4 provides that the utility seeking to discontinue service 'shall submit a sample copy of its discontinuance notice to the Department for review and approval prior to distribution to customers.' Section 2.F.5 provides that a utility 'may request permission from the Department to expedite the discontinuance process upon a showing that it is necessary for safe and adequate service or in the public interest.' These provisions demonstrate that Commission intervention in the process is a necessary and required check before a utility may discontinue ESCO service. Indeed, the UBP was designed, in part, to specifically afford the ESCOs with fundamental due process rights in advance of any potential discontinuance of service and accordingly the interpretation urged by the Joint Utilities would have the opposite effect by doing away with such rights. The need for Commission intervention is further supported by Staff's Report in Case 18-M-0376 which states that 'The UBP details the discontinuance process, including timeframes, and includes participation by Staff,'" RESA said in its comments

The New York Retail Choice Coalition and supporting energy service entities filed supplemental comments opposing the relief sought by the Joint Utilities. The Coalition stated, among other things that, the JU proposal, "conflicts with [a] DPS Staff recommendation requiring ESCOs to adopt cyber security framework consistent with NIST."

The Coalition said in its comments that, "Staff specifically recommends that new section 12.B to the UBP require, 'All ESCOs [to] have processes and procedures in place regarding cyber security consistent with the National Institute of Standards and Technology Cyber Security Framework.' In contrast, the JU DSA requires ESCOs (among other ESEs) adopt a uniform set of cybersecurity requirements inconsistent with the NIST Framework. In their current forms, the DSA and SAF fail to follow a tailored risk-based approach, opting instead to implement uniform requirements on every ESE and every possibly relevant third party. The DSA Coalition once again urges Staff and the Commission to reconsider the DSA's rigid framework and instead opt to adopt standards that embody risk-based principles. If the Commission granted the JU Petition, it would effectively reject Staff's recommended revisions to the UBP, an open issue pending under the Evidentiary Hearing."

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