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Retail Supplier Files Complaint Against NYISO

January 30, 2019

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Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Retail supplier Light Power & Gas of NY LLC (LPGNY) filed at FERC a complaint against the New York Independent System Operator, Inc. requesting that the Commission direct the NYISO, "to immediately cease its unreasonable, unlawful and unduly discriminatory actions and process LPGNY’s application for NYISO registration expeditiously and without further delay."

LPGNY stated in its complaint that, "In this Complaint LPGNY challenges the NYISO’s actions to block LPGNY’s access to NYISO markets by refusing to process its application for registration because of the NYISO’s determination that LPGNY is a common law successor by 'mere continuation' that is allegedly liable for various debts of bankrupt former NYISO market participant North Energy Power LLC ('North Energy')."

LPGNY alleged in its complaint that, "The NYISO has ignored the plain language of its Open Access Transmission Tariff ('OATT') by importing a standard of common law successor liability into the OATT."

LPGNY alleged in its complaint that, "Further, the NYISO has violated its tariff because it has not completed various predicate steps required under the bad debt/re-entry provision in Section 27 of the OATT. In addition, any determination of successor liability should be made by a New York court, not by the NYISO. Furthermore, the NYISO’s application of an unwritten common law standard of successor liability is unreasonable and unduly discriminatory, and, as a matter of policy, FERC should find that a successor liability policy or standard is unreasonable and unduly discriminatory to the extent it is applied by biased NYISO administrators rather than neutral judges. In any case, applying a common law standard that necessarily treats customers differently without an easily understood and clearly written basis for doing so is unreasonable and unduly discriminatory. Finally, the unwritten common law successor liability policy or standard—which has prevented LPGNY’s access to NYISO markets— significantly affects the terms and conditions of service under the OATT, and therefore, is unenforceable and void as applied to LPGNY, since it has not been filed by the Commission under Section 205 of the FPA."

Describing itself in the complaint, LPGNY stated, "LPGNY is a duly formed New York limited liability company with its principal office located at 1449 37th Street, Suite 611, Brooklyn, New York 11218. The company was originally formed on or about February 28, 2014. From its inception, LPGNY was intended to market electricity to retail customers in New York. LPGNY was part of a larger 'Light Power & Gas' brand created to market retail electricity and natural gas to customers in various states/markets. For example, a different company, Light Power & Gas LLC ('LPG Plain'), was formed in 2013 and actively served retail natural gas customers in New York until the fall of 2018. On the electricity supply side, the concept was to form separate Light Power & Gas entities in each state/market. Thus, in New York, LPGNY (Light Power & Gas of NY LLC) was formed. Likewise, entities such as Light Power & Gas of TX LLC ('LPGTX'), Light Power & Gas of MW LLC ('LPGMW'), Light Power & Gas of PJ LLC ('LPGPJ') were formed for retail electricity marketing in other states/markets (LPG Plain, LPGNY, LPGTX, LPGMW and LPGPJ, collectively 'LPG Brand Entities'). Due to time constraints, the LPGNY business was never advanced in New York through the various approvals needed to become operational. Nonetheless, LPGNY was intended to operate as a retail electricity seller in New York from its inception in 2014."

LPGNY stated that, in the fall of 2018, LPGNY filed for and received its eligibility to operate as a retail energy seller or energy service company ('ESCO') from the New York Department of Public Service ('NYSDPS').

LPGNY stated that, "To date, LPGNY has expended significant personal services time of its Vice President, Abe Leiber, and one staff member in pursuing efforts to enter the New York marketplace. This is in addition to significant personal services time expended—over years—to develop the Light Power & Gas brand more generally through the LPG Brand Entities, efforts that resulted in LPG Plain serving natural gas customers as a fully operational ESCO in New York until the fall of 2018."

LPGNY in its complaint alleged that, in response to its application for registration to participate in NYISO, it received a letter from NYISO stating, "NYISO will hold LPGNY’s Application in abeyance pending North Energy Power LLC’s (‘North Energy’s’) payment of its outstanding and unpaid obligations to the NYISO."

LPGNY in its complaint alleged that, "The NYISO Letter further stated that: 'Pursuant to Section 27.4 of the NYISO’s Open Access Transmission Tariff, a Transmission Customer that defaults on a payment obligation to the NYISO must cure the default and make payment in full prior to being re-admitted to participate in NYISO markets. The NYISO has determined that LPG[NY] is a continuation of North Energy, with successor liability for North Energy’s debts to NYISO. The NYISO will resume evaluation of LPG[NY]’s application to determine whether it meets NYISO’s minimum participation criteria, registration requirements, and creditworthiness standards once North Energy pays all amounts owed to NYISO in full.'"

LPGNY in its complaint alleged that an attorney for NYISO has stated that this position was based on the NYISO’s review of LPGNY’s filings at the NYISO and New York Public Service Commission ('NYSPSC') and those of North Energy that showed similar persons involved with both companies.

LPGNY in its complaint alleged that an attorney for NYISO also stated that the NYISO recognized that successor liability is a legal area of "balls and strikes" and involved "looking at grey areas."

LPGNY stated in its complaint that, "By way of background, North Energy is a separately owned and operated limited liability company. North Energy is an ESCO that served retail electricity customers in New York retail markets, until September 17, 2018, when it filed for Chapter 11 bankruptcy ('North Energy Bankruptcy'), due to unanticipated events involving the separate bankruptcy of its creditor and vendor, Big Apple Energy."

North Energy's bankruptcy had been previously reported by RetailEnergyX.com

LPGNY alleged in its complaint that the NYISO’s FERC-accepted OATT simply does not contain any language referencing a 'continuation' or 'mere continuation' or successor liability of any kind.

LPGNY alleged certain language at OATT § 27.4 only applies to a Transmission Customer as defined in the tariff. "There is no language in the tariff that permits the NYISO to extend the definition of a Transmission Customer to an alleged 'successor," LPGNY alleged

"Further, as a matter of policy, FERC should find that imputing an unwritten common law standard for successor liability into the OATT is unreasonable and unduly discriminatory. Even if the standard were included in the tariff in some written form, it would require administrative staff of the NYISO to make findings of fact and law regarding the applicant or market participant’s successor liability," LPGNY alleged

Docket EL19-39-000

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