New York PSC Reset Order Defines Mass Market, Small Non-Residential Customers To Which New ESCO Price Limits Apply
PSC Allows Auto-Renewal Only Onto Guaranteed Savings Contract
ESCOs Prohibited From Offering One-Time Promotional Items As Inducement For Customer Enrollment
New York PSC Imposes Price Caps On Fixed, Variable ESCO Products, In "Reset" Order
ESCOs Must Obtain Affirmative Consent To Continue To Serve Customers Under New, Compliant Products
ESCOs Prohibited From Bundling Any Service, Product With Supply That Is Not Energy Related
On-Bill Comparison Will Compare Default Service, ESCO Prices
ESCOs Must Submit New Applications To Continue Eligibility To Serve Customers
New ESCO Financial Surety Requirements To Be Developed
December 12, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
The following story is brought free of charge to readers byEC Infosystems, the exclusive EDI provider of EnergyChoiceMatters.com
Updated, 7:30 p.m. ET
Note: The "Updated" section contains only new information. For our original reporting, background, and context, see our original story further below under "Earlier"
The New York PSC has issued its written order limiting ESCO products in the mass market, providing further details on various provisions that were first reported by EnergyChoiceMatters.com earlier today
The PSC's order applies for residential or small non-residential customers (mass-market customers). Except where specifically noted otherwise, all provisions discussed below apply to only mass market customers
Small non-residential electric customers are defined by the PSC as non-demand metered customers and small non-residential gas customers are defined as those using less than or equal to 750 dekatherms (dth) per year
Small non-residential customers will not be excluded from the definition of the mass market at this time, the PSC said
The threshold level of 750 dth/year for gas customers will not be modified at this time, the PSC said. "While ESCOs believe the threshold level is too high and Staff opines that it may be too low, no persuasive arguments have been presented by the parties for either lowering or raising the threshold level," the PSC said
The PSC ordered that, "effective 60 calendar days from the date of this Order, energy service companies (ESCOs) shall enroll new residential or small non-residential customers (mass-market customers) or renew existing mass-market customer contracts for gas and/or electric service only if at least one of the following conditions is met: (1) enrollment includes a guaranteed savings over the utility price, as reconciled on an annual basis; (2) enrollment is for a fixed-rate commodity product that is priced at no more than 5% greater than the trailing 12-month average utility supply rate; (3) enrollment is for a renewably sourced electric commodity product that (a) has a renewable mix that is at least 50% greater than the ESCO’s current Renewable Energy Standard (RES) obligation, (b) the ESCO complies with the RES locational and delivery requirements when procuring Renewable Energy Credits (RECs) or entering into bilateral contracts for renewable commodity supply, and (3) there is transparency of information and disclosures provided to the customer with respect to pricing and commodity sourcing."
Concerning the permissible variable rate guaranteed savings product, the PSC said that, "rather than prohibit variable-rate, commodity-only offerings, such offerings will be permitted only if the ESCO guarantees to serve the customer at a price below the price charged by the utility on an annually reconciled basis."
The PSC ordered that, "The product must guarantee savings on an annual basis, or with greater frequency; to achieve this, the ESCO must perform a reconciliation on an annual basis, or with greater frequency, and provide a credit or refund to any customers who were billed more over the relevant period than they would have been billed had they remained on the utility default supply rate. ESCOs providing a guaranteed savings product must also perform such a reconciliation when customers taking such products cancel their ESCO service and must provide a credit or refund to any customers who were billed more over the relevant period, either since the end of the previous reconciliation period or since the customer was enrolled if no reconciliation period had yet ended, than they would have been billed had they remained on the utility default supply rate."
"In either case, the credit or refund must be at least as large as the difference between what the customer was billed during the relevant period and what the customer would have been billed had the customer remained on the utility default supply rate," the PSC said
Concerning the permissible fixed rate product that can be no more than 5% higher than the utility 12-month average rate, the PSC said, "as an interim measure, fixed-rate products will be limited to a price no greater than the trailing 12-month average utility supply rate plus a premium of no more than 5%."
The PSC ordered that the utilities shall ensure that this 12-month average utility supply rate data is provided on their websites for each mass-market service class and for each mass-market customer grouping (e.g. load zone) that receives different supply rates based on the applicable tariff. The utilities also shall establish a standard quarterly schedule for updating this data. Specifically, utilities shall publish on their websites 12-month average utility supply rates within 15 days of March 31, June 30, September 30, and December 31.
ESCOs are required to implement any necessary modifications to any new fixed-rate contracts based on a change in the referenced average within five days of the deadline for utility publication (April 20, July 20, October 20, and January 20).
The PSC further said, "While the Commission is allowing fixed-rate products to continue so long as the ESCOs comply with the pricing requirements, we leave open the possibility that, upon future consideration, fixed-rate products sold at prices higher than utility rates will be disallowed entirely."
"Staff should monitor the initial results of the instant reform - imposing a premium cap - and then evaluate the need for future additional customer-protection proposals regarding fixed-rate products, including prohibition of the product, in light of customers’ rights to reasonably and transparently priced energy services," the PSC said
Concerning renewals of fixed price contracts, the PSC said, "any ESCO that automatically renews a fixed-price customer shall be required to place that customer on a variable-price commodity-only contract [will be required to be offered at a guaranteed savings], unless the ESCO obtains affirmative customer consent to continue with a fixed-rate plan, even if the contract otherwise provides for the renewal of the existing fixed-rate plan."
"Any mass-market customer contract for a fixed-rate commodity service that is subject to automatic renewal shall be renewed by the ESCO only as a contract for variable-rate, commodity-only service that includes a guaranteed savings over the utility price, unless the ESCO obtains affirmative customer consent to renew the contract as a fixed-rate contract that is priced at no more than 5% greater than the trailing 12-month average utility supply rate," the PSC said
"Considering that all future variable-price commodity-only ESCO contracts will be required to be offered at a guaranteed savings, a fixed-rate ESCO customer that is rolled over to a variable-price commodity-only contract will be protected from unreasonably high prices and/or rate shock associated with the change in contract terms," the PSC said
Concerning requirements for the renewable electric product permitted to be offered by ESCOs, the PSC said that, "ESCOs will be permitted
to offer a renewable product that is less than 100% renewable,
so long as: (1) the renewable percentage mix is at least 50%
greater than is required by the RES LSE obligation for the year;
(2) the ESCO complies with the RES locational and delivery
requirements when procuring RECs or entering into bilateral
contracts; and (3) there is transparency of information and disclosures provided to the customers."
"To address concerns
regarding the current availability of renewably sourced
electricity and RECs, ESCOs will not be limited to procuring
electricity or RECs from RES Tier 1 eligible generation
facilities, however. Rather, any generation facility satisfying
the Climate Leadership and Community Protection Act (CLCPA)
definition of 'renewable' - and whose electrical output
satisfies the locational and delivery requirements – will be
eligible, regardless of the facility’s vintage," the PSC said
The CLCPA defines renewable resources as, "systems that
generate electricity or thermal energy through use of the
following technologies: solar thermal, photovoltaics, on land
and offshore wind, hydroelectric, geothermal electric,
geothermal ground source heat, tidal energy, wave energy,
ocean thermal, and fuel cells which do not utilize a fossil
fuel resource in the process of generating electricity."
This definition is similar, but not identical, to the RES
eligibility requirements established in the CES [Clean Energy Standard] Order.
The PSC said that, "ESCOs will be required to satisfy their minimum renewable requirement in the same ways they satisfy their annual CES requirements and by entering into purchase agreements with any generator of any vintage that satisfies the CLCPA definition of 'renewable.' In other words, ESCOs will be permitted to satisfy their minimum renewable requirement by: (1) by purchasing RECs from eligible renewable generators through NYGATS; (2) by purchasing Tier 1 RECs from NYSERDA; (3) by procuring RECs from eligible renewable generators through bilateral contracts; (4) by making Alternative Compliance Payments (ACP) to NYSERDA; or (5) by entering into bundled energy and REC purchase agreements with eligible renewable generators."
"[A]ll voluntary renewable electricity purchases made by
ESCOs will be subject to the same locational and delivery
requirements as Tier-1-eligible REC purchases," the PSC said
There will not be any price limit on the permissible renewable electric products. The PSC said that with the newly required on-bill price comparison (noted below), "the premium associated with the
renewable product compared to the utility product will be
readily apparent to a customer."
The three permissible products listed above may only be offered to customers who are not assistance program participant (APP) customers. The existing prohibition on service to APP (low-income customers), absent a PSC-approved guaranteed savings plan, remains in place
Specifically, with respect to renewable plans, the PSC said that, "The Appellate Division, Third Department, recently
upheld the Commission’s prohibition on ESCOs serving low-income
assistance program participants unless an ESCO can guarantee
that the customer will pay no more than he or she would have
paid to the utility. We find that this requirement remains
appropriate, and we note that ESCOs can always provide renewable
commodity products to those low-income customers if the product
meets the aforementioned price-guarantee requirements."
ESCOs will not be permitted to offer value-added products and services that have no energy-related benefit and/or that are offered as a one-time promotion
"Value-added products and services that have no energy-related
benefit and/or that are offered as a one-time promotion
do not further the energy policy goals of the State and,
therefore, provide no value in the context of the retail energy
market. These promotional items, such as gift cards or other
'swag,' are frequently offered as promotions to induce customers
to sign a contract with the ESCO. However, the market value of
these items often is significantly less than the price the
customer ultimately pays for the item or service over the term
of the contract. Accordingly, because these promotional items typically do not provide any energy-related benefit to customers, ESCOs are prohibited from offering them to prospective customers as inducements to sign a contract," the PSC said
The PSC established a further collaborative to determine if ESCOs should be permitted to offer energy-related value-added products or services (aside from the specific exception granted to Agway noted in our original story below)
Concerning potential products that could be considered, the PSC said "Among the energy-related value-added products or services that ESCOs could develop are demand-management programs or tools, voluntary dynamic pricing programs or tools, and energy-efficiency measures."
"Other examples of desirable energy-related, value-added products and services include: sophisticated energy-management services and smart-grid technologies; energy storage products; and electric vehicle-related services," the PSC said
The PSC noted that such products can be offered separate from ESCO service currently. "Considering whether ESCO products that include such services are beneficial to customers would require both consideration of whether and how ESCOs could and would be willing to provide those services and of whether the tethering of those services with energy supply by ESCOs would create benefits," the PSC said
The PSC noted that ESCOs may offer energy-related value-added products or services as part of an offering that also complies with the product limit rules listed above and which meets the price requirements under those rules.
Concerning the on-bill comparison of default service and ESCO prices as well as total cost, the PSC noted that the specific mechanism may vary by utility due to IT systems, etc
The PSC said, "A clear price comparison would also identify the difference between those two amounts in a manner that unambiguously conveys whether the customer is saving money or paying a premium for the ESCO service."
"The Commission also finds that customers could benefit from a bill that contains a chart showing the preceding 12-month period and a comparison of the ESCO price paid by the customer and the price the utility would have charged over that term. An ideal price comparison also would identify the difference between those two 12-month amounts in a manner that unambiguously conveys whether the customer is saving money or paying a premium for the ESCO service over that term," the PSC said
"We recognize that achieving these goals requires a tailored approach given that each utility may face unique hurdles to ubiquitously conveying price-comparison information. As one obvious example, differences in the utilities’ information technology systems could alter the costs, or reasonable implementation timelines, between the utilities if we were to direct utilities to provide identical information in an identical manner on a unified timeline," the PSC said, as further work will be done to develop the solutions
"The methods for conveying price comparison information could include, but are not limited to, websites, regular mail, email, customer service representative interactions, and interactive voice recording system interactions," the PSC said
The PSC did not adopt any reforms concerning the manner in which ESCOs may market products (e.g. door to door)
The adopted pricing and other reforms, "render the need for more incremental marketing restrictions unnecessary at this time," the PSC said
Concerning billing, the PSC said that, "For now, all existing billing methodologies available to ESCOs will be permitted. ESCOs that continue to use CUB [Consolidated Utility Billing] may reach out directly to customers with any marketing materials and/or other messages regarding their products and services."
"The suggestion of various parties that the CEB [Consolidated ESCO Billing] system should be the only permissible billing system is rejected," the PSC said
The PSC will not require any changes to the POR program at this time, but will require each individual ESCO's uncollectible accounts to be tracked
"[A]s a practical matter, overhauling the POR system may not be worth its cost if the underlying concern is largely mitigated via other reforms," the PSC said
"However, the utilities will be required to track and maintain, by individual ESCO, additional data regarding uncollectible accounts. At present, the utilities do not track ESCO-specific uncollectible accounts or calculate uncollectible factors for each ESCO. Should there be a need to modify the POR system in the future, such data would provide a basis for establishing either an ESCO-specific POR discount rate or a tiered ESCO POR discount rate," the PSC said
Cornering the requirement for ESCOs to file new applications for eligibility as first noted in our original story below, an ordering paragraph states, "ESCOs currently operating in New York that intend to continue to renew contracts with customers in New York and/or enroll new customers in New York following the effective date of Ordering Clause No. 1 (i.e., 60 calendar days following the date of this Order) are directed to file an application in accordance
with the body of this Order no later than 30 calendar days following the date the revisions to the Uniform Business Practices become effective (i.e., no later than 90 calendar days following the date of this Order)." Note that the ordering paragraph does not limit the re-filing requirement to "mass market" ESCOs (as written, the reference to Ordering Clause No. 1 is only to such clause's effective date, not customer type)
"Existing ESCOs that currently are validly operating in
New York will continue to be eligible to operate pending the
effective date of the modified UBP adopted in this Order.
However, all currently operating ESCOs that wish to continue
operations by enrolling new customers or renewing contracts with
existing customers following the effective date of the modified UBP," the PSC said
Updated, 12:23 pm: A PSC news release describes the order as applicable to "residential and small commercial" customers; a definition of small commercial was not immediately available
** 12:00 p.m. -- This is a breaking news alert. This story will be updated once a written order or other information is released
The New York PSC adopted today an order in its retail market "reset" order which, among other things, limits products which ESCOs may offer
A written order was not immediately available. The following is based on Staff's description of the order during today's PSC session. The proceeding generally addressed mass market service. The specific definition of mass market was not available absent issuance of a written order
Under the order, ESCOs will be limited to offering the following products
• A variable rate, commodity-only product that guarantees savings in comparison to relevant utility commodity service
• A fixed rate product that is limited in price to a 12-month trailing average utility supply rate plus a 5% premium
• A renewable electric commodity that is at least 50% greater than the minimum renewable obligation of the LSE, and which meets locational, deliverability and other requirements that will be delineated in the PSC's order
ESCOs will not be permitted to bundle retail energy commodity with non-energy-related products and services, such as gift cards, frequent flier miles, sports team tickets, etc.
A further collaborative process will evaluate what, if any, products may be offered by ESCOs which bundle commodity with an energy-related value-added product or service
However, the PSC, at this time, did specifically authorize Agway to offer its plan which bundles a prepaid home heating and cooling service with commodity supply
The PSC will allow ESCOs to petition for approval of potential other plans bundling supply with energy-related value-added products and services
Based on a discussion between Commissioner Diane Burman and Staff, ESCOs may continue to serve customers under existing term contracts. Based on this discussion, month to month plans that do not comply with the above requirement may not continue
However, any new and renewed contract, including auto-renewals, must comply with the requirements of the order, including those requirements listed above
Moreover, the ESCO will need to obtain affirmative consent to serve the customer under any new product. An existing product which already complies with the new requirements may be auto-renewed; however, for any new product (including revisions to comply with the new requirements), the ESCO will need to obtain affirmative consent to serve the customer under the new/revised product
The order will also require utilities to include on-bill price comparisons of default service and the ESCO's service for customers on competitive supply
Additionally, utilities, on bills, must itemize any non-commodity ESCO charges separately from supply
All ESCOs seeking to offer service to mass market customers will be required to submit, within 90 days, a new retail access eligibility application form. According to a comment from Commissioner Diane Burman, ESCOs will be allowed to continue to operate while the new eligibility applications are reviewed
A further process will be established to further evaluate financial surety required of ESCOs and the appropriate amounts and types of surety. A Staff report is due within 120 days