RESA Formally Petitions New Jersey BPU To Withdraw Cease-and-Desist Letter On Fixed Price Pass-Throughs, After Staff Indicates Staff Would Not Withdraw Letter
February 15, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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The Retail Energy Supply Association (RESA) has filed a formal petition with the New Jersey BPU seeking withdrawal of Board Staff's January 22 letter which has instructed third party suppliers (TPSs) to cease and desist any pass-throughs to fixed price customers, under a change-in-law clause, related to P.L. 2018, c. 17.
RESA further sought a declaration that retail suppliers may pass-through increased solar RPS costs under the Clean Energy Act (CEA), P.L. 2018, c. 17, pursuant to the terms of their customer contracts.
As previously reported by EnergyChoiceMatters.com, the Director of the New Jersey BPU's Division of Energy had on January 22 issued a letter to each New Jersey licensed third party supplier (TPS) concerning any action to increase the supplier's fixed rate contracts due to P.L. 2018, c. 17, which modified various provisions of the state's renewable portfolio standard, with the letter informing suppliers that the invocation of a "change in law" material change clause to pass through costs under fixed rate contracts is impermissible under the BPU's adopted rules for costs related to P.L. 2018, c. 17. The cease and desist letter also directed suppliers to issue refunds
In brief, the January 22 cease and desist letter stated that TPSs are not required by operation of law to change the prices that they charge to their customers as a result of P.L. 2018, c. 17; therefore, the fact that a TPS may incur an increase in its costs as a result of P.L. 2018, c. 17 does not permit the TPS to increase fixed rates under N.J.A.C. 14:4-7.6(l)
In a letter dated January 25, RESA asked that the cease and desist letter be withdrawn, and argued that the Director's letter, "overlooks controlling statutory authority that expressly permits RESA members (as well as any and all third party suppliers) to raise prices under the circumstances presented here."
RESA has now submitted a formal petition for the BPU to withdraw the cease and desist letter.
In its petition, RESA stated that on February 6, 2019, the Director of the BPU's Division of Energy, who had authored the January 22, letter, contacted RESA counsel by phone and stated that Staff would not withdraw the cease and desist letter.
RESA in its petition stated, "This Petition seeks to enjoin the Board of Public Utilities ('Board') from contravening the Clean Energy Act ('CEA'), P.L. 20 18., c. 17 by authorizing and/or allowing the
issuance of 'Cease and Desist' letters that place obligations on Third Party Suppliers ('Suppliers')
that are contrary to the express language and intent of the CEA, and which authorization and/or issuance is inconsistent with both Board Orders and the Board's due process obligations under the Administrative Procedure Act ('APA'), N.J.S.A. 52:148-1 to -15."
RESA in its petition stated that the CEA explicitly provides that, "Notwithstanding any rule or regulation to the contrary, the board shall recognize these new solar purchase obligations as a change required by operation of law and implement the provisions of this subsection in a manner so as to prevent any subsidies between suppliers and providers and to promote competition in the electricity supply industry." [emphasis by RESA omitted]
RESA in its petition further said that the Board's Energy Competition Rules, N.J.A.C. 14:4 et seq., provide, with respect to Supplier customer contracts, that: "The contract may not include provisions (sometimes referred to as 'material change notices') that permit the TPS to change
material terms of the contract without the customer's affirmative
authorization unless the change is required by operation of law.
'Material terms of a contract' include, but are not limited to, terms
regarding the price, deliverability, time period of the contract, or
ownership of the gas or electricity. 'Non-material' terms include
those regarding the address where payments should be sent or the
phone number to be used for customer inquiries. Changing the
price to reflect a change in the Sales and Use Tax or other State-mandated
charge would be permitted as a change required by
operation of law." [emphasis by RESA omitted]
RESA in its petition stated that, "In other words, the CEA requires the Board (regardless of any existing regulations
to the contrary) to treat the increased solar RPS obligations as a 'change required by operation of
law,' and the Board's regulations permit Suppliers to pass through any 'change required by
operation of law.'
It is clear that the CEA language, which exactly mirrors the language of the
Board's regulations related to this issue and contained in a subsection of the CEA addressing the
issue of existing contracts, was intended to allow Suppliers to pass through costs associated with the
increased RPS obligations under existing customer contracts."
RESA in its petition stated that, "The Board is obligated, under the clear and express terms of the CEA, to treat the
changes to the solar RPS as 'a change required by operation of law.' N.J.S.A. 48:3-87(d)(3)(c)."
RESA in its petition stated that, "The legal conclusion and direction in the Cease and Desist [letter] appears to be based on
the erroneous presumption that the language from the CEA, '[n]otwithstanding any rule or
regulation to the contrary,' does not supersede comments made by the Board when enacting
This flawed interpretation is contrary to any theory of statutory interpretation. Suppliers are obligated, by law, to purchase solar renewable energy certificates
('SRECs') based on a percentage of retail load served."
RESA in its petition stated that, "The Cease and Desist would require Suppliers to fund subsidies to the solar industry
under existing contracts without any possible recourse or means to recover those costs," which RESA said would be contrary to the stated language in the CEA
RESA in its petition stated that, "The Cease and Desist [letter] was not authorized by an Order of the Board or by a
rulemaking proceeding that provided an opportunity for notice and comment; it is unsupported by
As such, the Cease and Desist was improperly issued; and/or issued pursuant to an
improper delegation of Board authority."
RESA sought a stay of the cease and desist letter which its petition is adjudicated