Energy Services Provider Seeks Clarification From Regulator Whether Its Billing Service Model Requires It To Be Registered As Natural Gas Seller
March 16, 2020 Email This Story Copyright 2010-20 EnergyChoiceMatters.com
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Counsel for an unnamed energy services provider (ESCO), who provides energy management services to commercial customers (not residential customers), sought clarification from the Connecticut PURA as to whether its billing services require it to register as a natural gas seller
The ESCO has developed an 'Energy Management Outsourcing' model which includes deploying energy efficiency equipment, upgrades and technology, a proprietary energy management hardware and software system, along with providing billing and other managed services to manage energy usage and reduce energy expense.
As part of these energy management outsource services, ESCO takes over its customers’ respective utility accounts, thus becoming the customer of record with the utility and any third-party suppliers, and thereby is the party legally responsible to make payment to the utilities; and, in fact, pays the utilities and any third-party suppliers. ESCO separately invoices its client customers on a calendar month basis under contract terms that economically result in ESCO and its clients splitting the savings that result from the energy efficiency measures implemented by ESCO.
"ESCO hereby seeks clarification that, under its business model, it is not required to register with the Public Utilities Regulatory Authority ('PURA' or the 'Authority') as a seller of natural gas," ESCO's petition states
Conn. Gen. Stat. § 16-258a, Registration of natural gas sellers. Procedures. Penalties, provides, in pertinent part:
(a) Each person that sells natural gas to an end user in the state and is not (1) a gas company ... a municipal gas utility … or a gas pipeline ... shall register with the Public Utilities Regulatory Authority prior to making any such sale ...
(b) Each person registered with the authority shall: (1) Maintain a bond or other security ... to ensure the person's financial responsibility and its supply of natural gas to end use customers in accordance with contracts, agreements or arrangements; (2) have a contractual relationship with an entity or entities to purchase natural gas supply; (3) comply with the National Labor Relations Act and regulations, if applicable; (4) comply with the Connecticut Unfair Trade Practices Act and applicable regulations; and (5) agree to cooperate with (A) each gas company, (B) each municipal gas utility ... (C) each gas pipeline ... (D) the authority, and (E) all other gas suppliers in the event of an emergency condition that may jeopardize the safety and reliability of the state's natural gas system.
"While ESCO recognizes that under Conn. Gen. Stat. § 16-258a, 'sellers' of natural gas are statutorily required to register with PURA, ESCO believes that it is not 'selling' natural gas to its clients. Rather it is acting, at most, as billing agent for its clients. This contrasts to a natural gas seller, that, as the statute contemplates, has, among other things, supply responsibilities to its customers, including the responsibility for having a contractual relationship with an entity or entities to purchase natural gas supply and must cooperate with gas companies, municipal gas utilities, gas pipelines, other gas suppliers and the Authority in the event of an emergency condition that may jeopardize the safety and reliability of the state's natural gas system. In contrast to gas sellers that take on supply obligations, such as those contemplated by § 16-258a, ESCO’s role is limited to selecting a retail gas supplier, whether it be the local LDC or a Connecticut licensed gas seller, and paying the retail gas bills," ESCO's petition said
"Where ESCO would be the customer of record, but its clients would ultimately take title to the gas, use the gas, and compensate ESCO for the gas, ESCO requests that PURA confirm that ESCO would not be considered a 'seller of natural gas,' requiring registration with the Authority. Because ESCO desires to begin providing its gas billing services to clients in Connecticut, ESCO respectfully requests expeditious consideration of this request," ESCO's petition said